Seeking Alpha
Dividend growth investing, retirement
Profile| Send Message|
( followers)  

This article is a companion to "Which Popular Dividend Growth Stocks Are Always Overvalued?"

Coming from the opposite direction from that article, here I use F.A.S.T. Graphs to identify which stocks from the 59 most commonly held dividend growth stocks persistently have traded at valuations that are lower than what F.A.S.T. Graphs presents as "earnings justified" valuation.

On the graphs in this article:

  • The orange line represents "fair value" as determined by F.A.S.T. Graphs, which apply Ben Graham's valuation formulas to each stock's earnings record.
  • The blue line represents each stock's "normal" (average) P/E over the timeframe shown by the graph.
  • The black line is the stock's actual price.
  • Undervaluation exists when the black line is below the orange line.

Please note that for REITs and MLPs, I use FFO (funds from operations) as the orange "earnings" line rather than operating earnings.

In this search for perpetual undervaluation, I found that the stocks divided into two groups. In the first group, the stocks display persistent undervaluation for nearly the full 15 years of the study period, both before and after 2008. In the second group, they display persistent undervaluation since 2008.

Companies Persistently Undervalued Before and After 2008

Chevron (NYSE:CVX)

(click to enlarge)

ConocoPhillips (NYSE:COP)

(click to enlarge)

ExxonMobil (NYSE:XOM)

(click to enlarge)

Kinder Morgan Energy Partners (NYSE:KMP)

(click to enlarge)

Royal Dutch Shell (NYSE:RDS.B)

(click to enlarge)

BHP Billiton (NYSE:BBL)

(click to enlarge)

Omega Healthcare Investors (NYSE:OHI)

(click to enlarge)

Companies Persistently Undervalued Since 2008

Lockheed Martin (NYSE:LMT)

(click to enlarge)

Raytheon (NYSE:RTN)

(click to enlarge)

Apple (NASDAQ:AAPL)

(click to enlarge)

Appearance in this article does not represent a recommendation of any kind with respect to these stocks. These are just snapshots of valuation from a single perspective. Please do your own due diligence before investing in anything.

Source: Which Popular Dividend Growth Stocks Are 'Always' Undervalued?