One stock I have recently come across appears dirt cheap and offers a substantial dividend yield. It appears a good bargain for long term investors and is in a defensive sector of the market.
Supervalu (NYSE:SVU) – “SUPERVALU INC., together with its subsidiaries, operates retail food stores in the United States. Its stores offer grocery, general merchandise, health and beauty care, pharmacy, and fuel products. The company operates stores under the Acme, Albertsons, Cub Foods, Farm Fresh, Hornbachers, Jewel-Osco, Lucky, Shaws, Shop n Save, Shoppers Food & Pharmacy, and Star Market banners, as well as in-store pharmacies under the Osco and Sav-on banners. It operates approximately 2,394 traditional and hard-discount retail food stores, including 899 licensed Save-A-Lot stores.” (Business description from Yahoo Finance).
8 reasons to buy Supervalu at under $8
2. Supervalu is selling at the very bottom of its five year valuation based on P/B and P/S.
3. SVU yields a robust 4.6% which should put a floor under the stock
4. Two insiders have just started to accumulate shares and there has been next to no insider selling of shares in 2011 despite the company’s challenges.
5. SVU has easily beat earnings estimates each of the last two quarters, and numerous upward revisions to 2012’s EPS estimates have occurred over the past thirty days.
6. Supervalu is dirt cheap. It is selling at 6 times this year’s expected earnings and just .04 (no this is not a misprint) times trailing annual revenues.
7. Despite a minor decline in same store sales, SVU has produced operating cash flow north of $1B a year each of the last three years. It has a market cap of less than $1.5B, and its cash flow is more than enough to service and reduce its $7B in debt over time. It has a B+ rated balance sheet ...
8. S&P has a price target of $11 on Supervalu and Credit Suisse’s target is $10 on SVU.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SVU over the next 72 hours.