While shareholder value can be unlocked through various special situations, one of the most common catalysts is earnings or announcements during earnings releases. With earnings season about to begin, investors should take a closer look at the following list of companies scheduled to report earnings next week.
GOOGLE INC (NASDAQ:GOOG)
Forward P/E: 14.44
PEG Ratio: 0.92
Return on Assets: 13.19%
Google has all the hallmarks of a company that has been taken for granted. With the most popular and third most popular websites (YouTube) on the internet, Google is one of the most important companies in the world but even within the technology industry it has lost some investor attention as the market fawns over up and coming technology giants like Facebook, Zynga and Groupon. Savvy investors would be wise to pay closer attention to Google Inc.
Excluding excess cash and investments, Google Inc's forward P/E falls to around 12. Considering Google's dominant position and growth opportunities, it deserves a higher multiple and as such investors should pay closer attention to this high priced stock because high priced stocks aren't all expensive (article).
JP MORGAN (NYSE:JPM)
Trailing P/E: 11.97
Forward P/E: 8.48
Some of the most famous names in finance have flocked to Bank of America (NYSE:BAC), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC). John Paulson's hedge fund Paulson & Co owns 123.86 million shares of Bank of America and 413.5 million shares of Citigroup.
Warren Buffett's Berkshire Hathaway (NYSE:BRK.A) owns 342 million shares of Wells Fargo after recently buying more. With all this attention paid to the other money center banks, it's easy to forget that JP Morgan successfully maneuvered its way through the financial crisis and solidified itself as the largest bank in the country.
JP Morgan recently increased its quarterly dividend to $0.25/share and approved a multi-year $15 billion share buyback program(release). $8 billion of this buyback program is approved for 2011. Based on the 3.91 billion shares outstanding, the $8 billion could have translated into a $0.5115/share quarterly dividend. In other words, its true effective dividend paying capacity is closer to $0.7615 per share. This was a very bullish announcement from JP Morgan. As we wrote in, "How to Profit From the Fed's Bank Dividend Decisions," TARP warrants may be the best way for bullish JPM investors who want to leverage their views of higher dividend payments.
Considering the company's cheap valuation, maybe it hasn't gotten the respect it deserves.
CHEROKEE INC (NASDAQ:CHKE)
Trailing P/E: 14.58
Return on Assets: 41.5%
The company's revenues have suffered recently and because of rising input costs, it may be a difficult time for any retail company, but Cherokee is worth a look. As a marketing and licensing firm, Cherokee has high margins and any growth in revenues should provide significant upside. Cherokee Inc has a strategic partnership with Target Corp (NYSE:TGT). Any change in this relationship could present risks to investors.
MATTEL INC (NASDAQ:MAT)
Trailing P/E: 13.81
Forward P/E: 11.50
Return on Assets: 11.15%
The toy designer and manufacturer continues to face pressures from two sides as input costs rise and margins shrink with retailers like Wal-Mart (NYSE:WMT) driving down retail selling prices. While these are real concerns, the stock has rallied strongly with the rest of the market. Even after the strong move, if the company can deliver on forecasted earnings, the company's valuations make it worth a look.
GENUINE PARTS COMPANY (NYSE:GPC)
Forward P/E: 14.48
Return on Assets: 9.39%
The automotive replacement parts distributor operates mainly under the business name NAPA Auto Parts. The company generates significant cash flow, trades at a reasonable forward P/E and contributes above average return on assets. In addition, it's attractive for income investors who will appreciate the 3.3% dividend yield.
SUPERVALU INC (NYSE:SVU)
Forward P/E: 7.62
The retail food company operates under the brand names Jewel-Osco, Albertson's, Save-A-Lot and Shaw's. The company is distressed, with a stock price that fell from $50 to $9 in the last three years. The stock has $7 billion in debt and the market is concerned about the company's ability to finance this debt if food prices continue to pressure margins. Still, the company is worth a closer investigation. Based on the current distress, the company could be leveraged for upside on any better than expected news.
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HASBRO INC (NASDAQ:HAS)
Forward P/E: 13.32
Return on Assets: 9.20%