The current market decline has created a great opportunity for value investors. Long term investors do not have to chase speculative growth names because the market has put a lot of large cap U.S. companies on sale. There are a number of household names trading at less than 10 times earnings.
Listed below are 4 companies that are selling at a discount to their intrinsic value.
Intel Corporation (INTC)
The recent Dow drop has turned Intel into an accidental high yielder. Intel trades just under 10 times next year’s earnings and has a dividend yield of 3.3%. Intel has a tremendous balance sheet as many tech bellwethers do. Intel has over $16 billion dollars in cash and just $2.5 billion dollars in debt. Intel is a great buy with tremendous free cash flow and an 11.5% earnings growth rate.
Corning is probably the cheapest stock on the list. Shares trade at just 8 times next year’s earnings and the company has a projected growth rate of 11.6% over the next 5 years. Corning has a fortified balance sheet with almost $4 billion in cash and approximately $2 billion dollars in debt. Corning is a cash cow that generates significant operating cash flow. Shares trade just above 1.5 times book value.
Bank of America (BAC)
The nation’s most recognizable bank is trading at just 7 times next year’s earnings estimate. Bank of America has the earnings power to overcome any significant losses in its loan portfolio. The lax financial reform bill shows that the government is still backing the big banks. At just $13.70 a share, Bank of America is a buy.
General Electric (GE)
General Electric has fallen to buy territory again at under $14 a share. Long term investors are getting a great chance to buy a global franchise that trades at just 10 times forward earnings. Even with the dividend cut last year, GE is still yielding almost 3%.
Disclosure: I do own shares of Bank of America and General Electric.