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Following is a list of 9 large cap stocks which are trading at very low P/E valuations and have median sell side price targets which are double their current market price.

Ticker

Company Name

Next Year P/E

Market Cap (million)

Price Target % Difference from Price

OTCPK:AAUKY

ANGLO AMERICAN

4.08

48356.18

108.97

MT

ARCELORMITTAL

5.02

30262.11

100.87

BAC

BANK OF AMERICA

4.49

65062.18

102.49

BCS

BARCLAYS PLC

3.39

29317.84

191.37

C

CITIGROUP INC.

5.06

76041.75

111.05

CS

CS GROUP R

5.23

30984.74

101.24

DB

DEUTSCHE BANK

4.63

35255.92

111.03

ING

ING GROEP N.V.

3.19

29098.96

136.67

OTCPK:SCGLY

SOCIETE GENERALE

3.34

22658.64

165.02

Not surprisingly, the list is dominated by banking and financial services names with risky balance sheets. As fellow Seeking Alpha contributor Roguemont has correctly described, these stocks are high risk to reward plays on a potential US recovery. There are bankruptcy risks associated with these stocks if macros worsen and there are significant write downs.

On the upside, if things improve and there is no major hit to the balance sheets of these companies, they can easily double given they are trading at over 50% discount to their tangible book values. For investors who prefer less risky opportunities in financial, I would suggest considering relatively well capitalized banks like JP Morgan (NYSE:JPM) and Wells Fargo (NYSE:WFC).

ArcelorMittal and Anglo American Plc are two non-financial names in the above list.

ArcelorMittal is a global steel producer. It produces a range of finished and semi-finished products. The company operates in five segments:

  • Flat carbon Americas
  • Flat carbon Europe
  • Long carbon Americas and Europe;
  • Asia, Africa and commonwealth of independent states,
  • Distribution Solutions.

Six analysts covering the stock have a median target price of $39.25 for the stock.

Although there are some near term challenges for ArcelorMittal from the expected slowdown in European automotive production in Q3, a likely pause in re-stocking and the consequent risk of falling spot prices. I believe the stock is a good buy given its low valuations. At these valuations I believe most of the negatives are already priced into the stock.

ArcelorMittal is a global leader in the steel industry, with a market share of ~9% and significant backward integration into iron ore and coking coal. The company is trading around its 2009 lows despite of the fact that it has a stronger business model now (more integration into raw materials than 2009 and better configuration of plant) and a far better balance sheet, with lower duration risk on debt, and less strict covenants.

Anglo American plc is a mining company. The company's portfolio of mining assets and natural resources includes platinum group metals and diamonds, with interests in copper, iron ore, metallurgical coal, nickel and thermal coal, as well as a portfolio of other mining and industrial businesses. The Company operates in Africa, Europe, South and North America, Australia and Asia.

Bloomberg recently reported that Anglo is exploring a possible bid for Macarthur Coal (OTC:MACDF), pitting itself against Peabody’s (NYSE:BTU) $4.9 billion offer. This is likely to weigh on Anglo American’s stock price in the near term on the concerns that Anglo American could potentially overpay. Thus I would not recommend this one as of now.

Source: 9 Low P/E Large Caps That Analysts Expect To Double