6 Stocks Selling at Historic Lows

by: Vatalyst

Price to book value is one of the most common valuation ratios used by investors when searching for undervalued companies Below are companies whose price to book ratios are sitting at ten year lows.

The current market crash presents investors with a great entry point these companies common stocks are trading slightly above their 52 week lows:

Pepsi (PEP)

The current price to book ratio sits at 4.15. Putting aside the stock’s price recent decline, let’s focus on what the business has been doing so far. Earnings per share grew 20% in the second quarter of 2011. Net income grew by 18%. These pleasing figures were a result of increased volumes in its snacks (10%), servings (6%) and beverages (5%) segments.

Pepsi continues on its international expansion program. It recently bought a Russian dairy and juice company. Pepsi is also focusing on increasing its carbonated soft drink consumption in countries like Turkey and India.

So, how does Pepsi compare against Coca Cola (NYSE:KO) on the valuation front:


Current P/E

Industry Average P/E

Price to Book





Coca Cola




Coca Cola’s common stock currently trades around the midpoint of its 52 week high/low range. Its price to book and price to earnings ratios sit at a ten year lows as well. It posted solid second quarter results, earnings rising 10% from last year, partly due to increased beverage volumes.

The noticeable difference is their product offerings. Pepsi’s product range is diversified with snacks, servings and beverages whilst Coca Cola is focused on beverages. If pressed to choose only one stock, this author will choose Pepsi due to its current stock price level and diversified product offering. However, truth be told, he would choose both.

Wal-Mart (NYSE:WMT)

Price to book ratio currently sits at 2.72. As with Pepsi, divert your attention from current weakness in the stock price to BUSINESS side of things.

First quarter ending April 30th, Net sales grew by 4.4% with Wal-Mart International accounting for the biggest gain (11%). Of concern is Wal-Mart’s US operations, which recorded a marginal gain of 0.6%. Earnings per share increased 12.6%. The annual dividend was raised by 21%.

It’s clear that Wal-Mart International is the key earnings driver. Weak demand in the US is a concern. The core of Wal-Mart’s US customers are unemployed, with the unemployment rate twice that of the national average.

So, how does Wal-Mart compare against Target (NYSE:TGT)? :


Current P/E

Industry Average P/E

Price to Book





Target Stores




Whilst both companies show similar valuations, the key difference is Wal-Mart’s exposure to international markets. This gives it the competitive edge over Target which is heavily exposed to unstable US consumer spending.

Wise investors should consider this stock at the current valuation. It won’t stay like that for long.

Adobe Systems (NASDAQ:ADBE)

Price to book ratio is 2.27. Increased subscription revenue, strong sales of its Creative Suit and Acrobat software helped Adobe post solid results.

Second quarter results was stellar: Revenue grew 9% with net income growing by 54% year on year. Earnings per share grew by 61%. Also making for pleasant reading, Adobe repurchased 13.7 million shares of common stock.

With the popularity of smart phones and tablets, there is plenty of room for enhancement in Adobe’s content authoring products. Of concern though, are the growth prospects in Japan considering recent events. Japan is Adobe’s second largest geographical region.

Adobe compares favorably against its industry peers:


Current P/E

Industry Average P/E

Price to Book









Advent Software




Factors counting in Adobe’s favor are: an upward earnings trend, strong balance sheet which is useful for future acquisitions and undervalued on a historic basis.

This is a worthwhile buy.

AstraZeneca (NYSE:AZN)

Current price to book ratio is 2.79. AstraZeneca posted second quarter results which were roughly unchanged from a year earlier. Net income was 0.3% up, due to a $500million loss due to competition from generic drug makers. On a positive note, investors should recognize AstraZeneca’s ability to still maintain earnings when taking such a big fall in revenue.

On the good news side, its biggest seller, Crestor achieved increased sales of 15%. Also, the share repurchase program has been boosted from $4 to $5 billion. The interim dividend has been increased by 21%.

On the valuation front:


Current P/E

Industry Average P/E

Price to Book

Dividend Yield (%)
















  • GlaxoSmithKline (NYSE:GSK) reported profit of $1.8 billion in the second quarter, in contrast to last year's loss of 495 million dollars, despite a 4% drop in revenues. This was achieved by sales and admin costs being reduced by 60% and underlying sales improving by 5%. Japan led the way with sales rising 20%. Sales in the US and outside Europe rose 15%. The common stock trades between its 52 week high/low range.
  • Merck (NYSE:MRK) reported a 7% increase in revenue, partly due to favorable exchange rates. Net income rose from $752 million to $2.02 billion dollars. The company plans to cut over 13 000 jobs, mostly from the US whilst increasing its sales force in developing countries. Its common stock is trading slightly above its 52 week low.

For the short term, investors can consider AstraZeneca based on its valuation and dividend yield.

For the most part, investors choose healthcare firms for their dividend yield. The main risk these businesses face is the finite patent life of their best selling products. When a patent expires, a huge fall in earnings usually follows, as generic companies can sell the same product at a far lower price.

Investors should bear the above in mind when considering healthcare stocks.

VSE Corporation (NASDAQ:VSEC)

Price to book ratio currently stands at 0.96. VSEC’s recent results make for unpleasant reading. For the six months ending June 30th, revenues fell 30%, net income was down by 27% and earnings per share declined 28%.

The primary reason for the poor results was the expiration of delivery orders on a US Army contract. Of further bad news, bookings were reduced by almost 50% due to federal budget tightening on military spending.

The only good news was the awarding of a contract by the US Postal Service to develop and deliver a fuel efficient prototype delivery vehicle.


Current P/E

Industry Average P/E

Price to Book

VSE Corporation




Northrop Grumman




General Dynamics




Northrop Grumman (NYSE:NOC) and General Dynamics (NYSE:GD) are far better choices. Their common stock trades slightly higher than their 52 week lows.

Northrop Grumman recently announced that it has secured various military contracts. General Dynamics has $18 billion worth of backlogs on its popular Gulfstream jet, which will keep production running at full speed for a few years. On the defense side, it still has contracts that run to 2014-2016.

Investors should give this stock a pass for now, at the same time, keeping an eye on the US Postal Service contract development.

Landauer’s Inc (NYSE:LDR)

Landauer's price to book ratio is 5.39. On the business front, Landauer’s results were only marginally better than same periods last year. For the first nine months of fiscal 2011, revenues increased 5%. Net income increased by a modest 1%.

For fiscal third quarter of 2011, revenue rose by 11% due to favorable exchange rates and a great showing by one of its key product segments. Gross profit increased by 6%.However, net income fell by 10% due to a one off prior year’s tax benefit.

Of further good news, Landauer landed a multi-year contract with the US Army. The International Radiation segment increased its revenue by 18%. Landauer also pays a dividend, yielding 4.79%.


Current P/E

Industry Average P/E

Price to Book





RadNet Inc



-1.27(2010), 2011-NA

The industry that Landauer operates in is broadly diversified, making comparisons difficult. RadNet Inc (NASDAQ:RDNT) is the closest in terms of operations. Radnet posted decent results decently. Revenue increased 12% to $155.6 million. Net income was $0.09 per share compared to a net loss of $0.32 for the same period last year.

The near term outlook looks promising, this stock is worth consideration.

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

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