8 Low PE Mega Caps With Over 25% Potential Upside

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Includes: BAC, C, INTC, MSFT, PBR, RIO, VALE, WFC
by: Rash Menaria

The following is a list of eight mega-cap ( > $100 bn market cap) companies with PE less than 10 and sell side consensus price target at least 25% above Current Market Price:

Tkr

Company Name

Next Yr PE

Price Target %Diff from Price

VALE

VALE SA

6.37

35.84

INTC

INTEL CP

9.09

26.39

RIO

RIO TINTO PLC

7.85

36.41

C

CITIGROUP INC.

8.55

27.78

BAC

BANK OF AMERICA

7.17

35.64

WFC

WELLS FARGO

8.55

27.12

MSFT

MICROSOFT

9.27

32.66

PBR

PETROBRAS

9.12

35.14

Here are some of the specifics about these companies, including a brief description of their businesses, growth rates (top line and bottom line) and Valuation:

Vale S.A. is a metals and mining company. The company is also a producer of iron ore and iron ore pellets. It also produces manganese ore, ferroalloys, bauxite, alumina and kaolin. It also produce aluminum, copper, coal, potash, cobalt, platinum group metals (PGMs) and other products. Its EPS forecast for the current year is 5.14 and next year is 5.09. According to the consensus estimates, its top line is expected to grow 36.27% current year and 2.45% next year. It is trading at a forward P/E of 6.37. Out of 23 analysts covering the company, 18 are positive and have buy recommendations and five have hold ratings.

Intel Corporation is a semiconductor chip maker. The company develops advanced integrated digital technology products, primarily integrated circuits, for industries such as computing and communications. The company designs and manufactures computing and communications components, such as microprocessors, chipsets, motherboards and wireless and wired connectivity products, as well as platforms that incorporate these components. Its EPS forecast for the current year is 2.02 and next year is 2.18. According to the consensus estimates, its top line is expected to grow 13.87% current year and 6.54% next year. It is trading at a forward P/E of 9.09. Out of 53 analysts covering the company, 30 are positive and have buy recommendations, four have sell recommendations and 19 have hold ratings.

Rio Tinto Plc is involved in each stage of metal and mineral production. The company produces aluminum, copper, diamonds, coal, iron ore, uranium, gold and industrial minerals (borates, titanium dioxide, salt, talc and zircon). With production mainly from Australia and North America, the company operates in more than 50 countries. Its EPS forecast for the current year is 10.08 and next year is 9.13. According to the consensus estimates, its top line is expected to grow 6.76% current year and decline 2.84% next year. It is trading at a forward P/E of 7.85. All six analysts covering the company are positive and have buy recommendations.

Citigroup Inc. is global a diversified financial services holding company. Citigroup businesses provide consumers, corporations, governments and institutions with a range of financial products and services. Its EPS forecast for the current year is 0.41 and next year is 0.53. According to the consensus estimates, its top line is expected to decline 4.42% current year and grow 4.43% next year. It is trading at a forward P/E of 8.55. Out of 22 analysts covering the company, 11 are positive and have buy recommendations, three have sell recommendations and eight have hold ratings.

Bank of America Corporation is a bank holding and financial holding company. Bank of America is a financial institution, serving individual consumers, small and middle market businesses, corporations and governments with a range of banking, investing, asset management and other financial and risk management products and services. Its EPS forecast for the current year is 1.27 and next year is 1.85. According to the consensus estimates, its top line is expected to decline 2.77% current year and grow 4.89% next year. It is trading at a forward P/E of 7.17. Out of 29 analysts covering the company, 18 are positive and have buy recommendations and 11 have hold ratings.

Wells Fargo & Company is a diversified financial services company. The company provides banking, insurance, investments, mortgage banking, investment banking, retail banking, brokerage and consumer finance through banking stores, the Internet and other distribution channels to consumers, businesses and institutions in 50 states, the District of Columbia, and in other countries. Its EPS forecast for the current year is 2.84 and next year is 3.59. According to the consensus estimates, its top line is expected to grow 0.38% current year and 4.5% next year. It is trading at a forward P/E of 8.55. Out of 29 analysts covering the company, 19 are positive and have buy recommendations, three have sell recommendations and seven have hold ratings.

Microsoft Corporation is engaged in developing, manufacturing, licensing and supporting a range of software products and services for different types of computing devices. Its software products and services include operating systems for personal computers, servers and intelligent devices, server applications for distributed computing environments, information worker productivity applications, business solutions applications, computing applications, software development tools, and video games. Its EPS forecast for the current year is 2.56 and next year is 2.77. According to the consensus estimates, its top line is expected to grow 11.56% current year and 6.45% next year. It is trading at a forward P/E of 9.27. Out of 35 analysts covering the company, 24 are positive and have buy recommendations, one has a sell recommendation and 10 have hold ratings.

Petroleo Brasileiro S.A. is an integrated oil and gas company. The company operates in five segments: exploration and production; refining, transportation and marketing; distribution; gas and power, and international. The exploration and production segment includes oil and gas exploration, development and production in Brazil. Its EPS forecast for the current year is 3.56 and next year is 3.65. According to the consensus estimates, its top line is expected to grow 8.47% current year and 7.06% next year. It is trading at a forward P/E of 9.12. Out of 12 analysts covering the company, five are positive and have buy recommendations and seven have hold ratings.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.