Here we have analyzed 5 stocks smart money gurus have been buying recently, according to GuruFocus.com. As always, please use the analysis below as a starting point for your own due diligence:
Intel Corporation (INTC)
Intel Corporation is a microprocessor manufacturing company. This company has $103.81 billion in the capital market. The operating margin of the company is at 33.55%, while the return on the equity is at 25.91%. According to its financial statements, it has made $12.25 billion in net income. The revenue has also grown by 21.10% last year. The price-to-earnings ratio is at 9.07 times and the price-to-book ratio is 2.11 times.
Advanced Micro Devices, Inc. (AMD), which is also a microprocessor manufacturer, is losing against competitor Intel. Advanced Micro Devices is under debt of $2.62 billion, while its operating margin is 6.54% on a market capital of $4.49 billion. Revenue growth has also slipped by 4.80%.
Intel is currently a world leading microprocessor manufacturer, and it is more in demand than Advanced Micro. Shares of Intel are also trading at a cheap price-to-earnings ratio. Buying Intel would be a good idea, since more and more institutional traders are seeing its true potential.
General Electric Co. (GE)
General Electric is a company with $164.73 billion in its capital market. It has a dividend yield of $0.60 (3.90%). The operating margin of the company is 11.47%, and the return on the equity is 11.62%. The company has generated earnings of $1.27 per share with an earnings ratio of 12.23 times. The company's earnings grew by 21.10% last year. The price-to-book ratio is 1.29 times.
Another company to be considered would be Siemens AG (SI). This company has a price-to-earnings ratio of 13.73 times. The dividend yield the company offers, at $2.70 (2.70%) per share, is lower than General Electric's. The operating margin of the company is 9.86%. The return on the equity is also high at a rate of 18.11%.
General Electric is underpriced relative to the price-to-earnings and price-to-book ratios. The performance of the margin and equity are on the positive side. It may be a good idea to buy while it is still trading at an underpriced level.
Ford Motor Company (F)
Ford Motor is a vehicles manufacturer with a market capital of $41.53 billion. On Aug, 22, 2011, Ford announced that it will collaborate with Toyota Motor Corporation (TM) on developing new a hybrid system for light trucks and SUVs. The formal agreement is expected by next year.
Ford has the operating margin of 5.21% while the return on the equity is as high as 755.33%. The price-to-book ratio is at 7.44 times. The earnings per share the company has generated are as high as $1.74 last year on a trailing twelve months basis. The price-to-earnings ratio is 6.30 times.
Now, let's see how its competitive partner Toyota is doing.
Toyota has the operating margin of 1.77% and a return on equity of only 2.39%, far lower than Ford on this measure. It has generated only $0.91 in earnings per share; moreover, the earnings ratio is now at a heat level of 79.14 times.
According to the analysis, this could mean that Ford is trading at a cheaper valuation and it is performing better than Toyota. Many large institutions may have noticed its value, and they may have pushed up the price and the book value to 7.44 times. However, it is possible that the book value may continue to rally up to 10 times when the share price is low.
Cisco Systems, Inc. (CSCO)
Cisco Systems has a market capitalization of $85.62 billion. Its dividend yield rate is $0.24 (1.60%), an increase from 0.80% in the last year. That's a double gain for the dividend. The profit factor of the company has generated an operating margin of 20.04% and a return on equity of 14.18%. In addition, the current shares seem to be at a fair price with the price-to-book ratio of 1.82 times and price-to-earnings of 13.36 times. It has generated earnings per share of $1.17 in the prior release.
Hewlett-Packard Company (HPQ) has also showed a strong stability in its operational margin and the return on the equity. The operating margin of the company is 10.12%, and the return on equity is 22.85%. This was lower profitability compared to Cisco Systems, but higher return on equity. Shares are cheaper than those of Cisco. The current price-to-earnings ratio is 6.12 times, while the price-to-book ratio is 1.38.
HP might be cheaper, but Cisco Systems showed that it is growing at a more rapid rate and more profitably than Hewlett-Packard. The dividend has also doubled from the last year. This shows that it is growing, so it might be a good idea to buy and hold its shares.
Citigroup, Inc. (C)
Citigroup is a global financial service provider. It has a total market cap of $90.28 billion. The dividend yield of the company is $0.04 (0.10%). The financial stocks have been suffering due to the fear of continuous natural disasters, and trading at a negative sentiment not seen since 2009. Shares of Citigroup are now trading at the low momentum of 9.56 times price-to-earnings ratio and price-to-book of only 0.52 times. In addition, it has been performing well even during these uncertain situations. The operating margin of the company was 20.41% and the return on the equity was 6.15%. The revenue has grown by 12.20% last year and the earnings by 23.90%. The earnings per share were $3.24.
One of its close competitors, Bank of America Corporation (BAC), is also trading at the negative sentiment. However, this bank is not performing at a standard quality level. The operating margin was only 1.91%, while the return on the equity was at a negative rate of -6.73%. The company's revenue growth has also fallen by 52.60% last year.
Citigroup seems to be at a low momentum, and it is possible that it is still operating profitably even during this crisis. The fear and emotion may have pushed the price down, and this could be the opportunity to get in before the others are aware of its efficiency. The idea is to buy at the current discounted price and hold this stock.