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The double-dip fears are storming the global economy and stocks are slowly falling amidst this uncertain environment. Therefore, it is essential to look for low-priced companies that are highly profitable. Net profit margin is the best way to measure a stock in terms of the company's ability to control costs and in comparison to its competitors. Moreover, a higher profit margin implies a high margin of safety.

Therefore, I have looked for the best five large-cap stocks that have profit margins above 20%. Analysts expect these companies to boost their EPS at a minimum annualized rate of 15% in the next 5 years. All of the following companies have a maximum 15 P/E ratio. I have analyzed these stocks from a fundamental perspective, adding my O-Metrix Grading System where applicable. (Data obtained from Finviz/Morningstar, and is current as of Sep 5):

Apple Inc. (AAPL): Apple will open a new store in Hong Kong this quarter. It was trading at a P/E ratio of 14.8, and a forward P/E ratio of 11.6, as of the September 5th close. Analysts expect the company to have an 18.2% annualized EPS growth in the next five years. Apple has no dividend policy, while the profit margin was 23.5% in 2010.

The company had a 122.15% EPS growth this quarter, and 66.91% this year. Sales increased by 81.98% this quarter. O-Metrix score of Apple is 6.89, while it returned 45% in a year. Target price implies a 30.9% upside potential, although it is trading 7.53% lower than its 52-week high. SMA50 is 1.17%, and SMA200 is 8.32%. ROA and ROE are 27.53% and 41.99%, respectively. Operating margin is 30.4%, while institutions hold 70.42% of the shares. The company has no debts for the last five years, and cash flow is ok. 43 out of 51 analysts recommend buying. Although Apple is suffering from the recession worries, it is far from losing its momentum. Read a full analysis of Apple here.

BlackRock, Inc. (BLK): BlackRock will launch a new ETF unit for 13 new equity funds. The company, as of the Sep 5 close, shows a trailing P/E ratio of 12.6, and a forward P/E ratio of 10.7. Estimated annual EPS growth for the next five years is 13.0%. With a profit margin of 26.0%, shareholders enjoyed a 3.52% dividend last year.

Earnings increased by 45.16% this quarter, and 72.52% this year. It has a significant O-Metrix score of 7.09. Target price is $217.31, indicating a 39.2% increase potential. The stock is currently trading 23.95% lower than its 52-week high, while it returned 3.4% in the last twelve months. Debts, assets, and yields seem all right. While gross margin is 60.0%, operating margin is 35.9%. Debt-to equity ratio is 0.2, far better than the industry average of 1.7. Moreover, it has a five-star rating from Morningstar. This is a stock to dive into. Recent dividend payments are:

Aug 31, 2011

$1.375

Jun 3, 2011

$1.375

Mar 3, 2011

$1.375

Dec 1, 2010

$1.00

Cliffs Natural Resources (CLF): Cliffs Natural has agreed on a 5-year contract with the United Mine Workers of America. As of Sep 5, it has an admirable P/E ratio of 7.1, and a forward P/E ratio of 5.1. Five-year annualized EPS growth forecast is 10.0%. Profit margin (26.4%) crushes the industry average of 4.7%, while it offered a 1.43% dividend.

The company had a tremendous EPS growth of 359.33% this year, and 52.30% this quarter. Sales rose by 52.48% this quarter. The stock is trading 22.99% lower than its 52-week high, and it has a gorgeous O-Metrix score of 9.36. Target price implies an about 60.5% upside movement potential, while it returned 17.5% in a year. ROA and ROE are 15.67% and 35.41%, respectively. Operating margin (33.8%), debt-to equity ratio (0.7), ROE, and profit margin are solid green flags. PEG value is 0.5. Cliffs Natural doubled its amount of dividend in latest yield. 13 out of 18 analysts covering the company recommends buying. Moreover, the stock is doing alright since Mar 2009. Cliffs Natural is a stable profit-maker in the long run. Here are the recent dividend payments:

Aug 11, 2011

$0.28

Apr 27, 2011

$0.14

Feb 11, 2011

$0.14

Nov 17, 2010

$0.14

Gilead Sciences (GILD): Gilead will attend Baird’s 2011 Healthcare Conference on Sep, 8. The California-based biopharmaceutical was trading at a P/E ratio of 11.7, and a forward P/E ratio of 8.6, as of Sep 5. Analysts estimate a 16.0% annual EPS growth for the next five years. Gilead has no dividend policy, while the profit margin (34.2%) more than triples the industry average of 10.9%.

Earnings increased by 33.01% this quarter, and 17.72% this year. Institutions own 88.35% of the stock, while it has an O-Metrix score of 7.88. ROA, ROE, and ROI are 23.56%, 43.33% and 29.95%, respectively. Gross margin is 75.2%, and operating margin is 46.6%. Target price implies a 21.8% increase potential, and it is currently trading 10.74% lower than its 52-week high. The company returned 16.8% in the last twelve months, whereas assets are steadily increasing for the last five years. Debt-to equity ratio is 0.6, way better than the industry average of 2.6. Returning stable profits is no sweat for Gilead in the long-term. Moreover, it has a four-star rating from Morningstar.

Southern Copper Corp. (SCCO): Southern Copper reported that no damage was taken in Peru’s 7.0-magnitude earthquake. It shows a trailing P/E ratio of 13.8, and a forward P/E ratio of 9.3, as of Sep 5. Analysts expect the company to have an annualized EPS growth of 16.0% in the next five years. With a profit margin of 32.4%, and a dividend yield of 7.65%, Southern Copper is a stunning stock for dividend lovers.

O-Metrix score of Southern Copper is 10.23, while it returned 1.5% in the last twelve months. Earnings increased by 110.24% this quarter, and 67.35% this year. While ROE is 50.95%, ROA is 26.16%. Operating margin is 52.2%. Target price indicates a 25.5% increase potential, and it is trading 32.42% lower than its 52-week high. Sales increased by 53.55% this quarter, and gross margin is 59.6%. SMA20 and SMA50 are 5.42% and 0.38%, respectively. Analysts give a 1.6 recommendation for Southern Copper (1=Buy, 3=Sell). Recent dividend payments per share are:

Aug 15, 2011

$0.62

May 2, 2011

$0.56

Feb 11, 2011

$0.58

Nov 12, 2010

$0.43

Find more information on O-Metrix Grading System here.

Source: 5 Low P/E Stocks With High Profit Margins