With the recent market pullback finally providing some value opportunities, I ran a screen to look for potential value stocks making 52 week lows. Specifically, I screened the Russell 1000 for stocks with 10% of their 52 week low and with an EV / EBITDA of less than 10. Only 15 stocks made the cut.
|Ticker||Short Name||EV / EBITDA||P/E||Return on Inv. Capital||YTD RETURN|
|AOL ||AOL INC||3.21||67.00||14.28||-18.05%|
|LXK ||LEXMARK INTL-A||3.35||6.59||24.66||-10.08%|
|TLAB ||TELLABS INC||4.25||21.27||9.55||-30.73%|
|ETR ||ENTERGY CORP||5.95||9.66||7.61||-1.90%|
|STRA ||STRAYER EDUCATIO||7.01||12.28||120.01||-19.98%|
|TGT ||TARGET CORP||7.13||12.97||15.98||-15.89%|
|EXH ||EXTERRAN HOLDING||7.88||N/A||1.12||-11.36%|
|ITRI ||ITRON INC||8.11||19.94||8.51||-3.99%|
|CSCO ||CISCO SYSTEMS||8.24||13.14||17.39||-13.30%|
|SYY ||SYSCO CORP||8.29||15.00||28.20||-0.77%|
|CPB||CAMPBELL SOUP CO||8.93||13.93||38.35||-2.96%|
|MRVL ||MARVELL TECH GRP||9.04||10.71||18.25||-21.46%|
|FRO ||FRONTLINE LTD||9.47||10.09||7.74||-17.27%|
So what on the list looks interesting?
Aeropostale was crushed after cutting first quarter guidance. However, the company still enjoys incredible returns on capital and a great balance sheet with almost 15% of its market cap in cash and no debt. With shares trading for less than 10x earnings and a massive share repurchase program, the company could prove to be a steal if it can begin to turn business around. As an added bonus, the company is a perenial LBO target.
Cisco and HP are both among a group of tech titans trading for depressed multiples. They are both dominant in several of their business lines, sport histories of strong earnings growth (both organic and through acquisitions) and have great balance sheets. Like ARO, their strong share buybacks should yield great returns for investors at today's prices. In addition, both sport a small dividend.
Finally, Sysco and Campbell Soup have both been sold off on fears of food inflation crushing their margins, but those fears are short term and overlook both companies' competitive advantages. Sysco enjoys tremendous scale and deep relationships with customers, plus management feels it is in the most attractive enviroment for making acquisitions in years. Campbell Soup, on the other hand, has a beloved and trusted brand name, which should allow the company to eventually pass through any rise in prices and sustain margins, and it could be an attractive candidate for a larger player.
Disclosure: I am long ARO.