When a person needs to stay within a budget and still get the returns they want, it is important to look closely at every detail of the company, from the earnings report to the balance sheet, and every bit of news you can find. Here are some of the some $20 stocks that analysts have recently upgraded to buys.
Mitsubishi UFJ Financial Group, Inc. (MTU)
What you get with Mitsubishi UFJ Financial is a company that can provide earnings of $31.08 per share for the period of 12 months after March 2011 and $67.87 per share for the period of 12 months after March of 2010. Its competitor Mizuho Financial Group (MFG) has earnings per share of $19.22 and $61.64 in 12 months ending March 2011 and 12 months ending March 2010, respectively. Furthermore, MTU has positive annual return on average equity of 5.40%. However, the larger company, Mizuho, offers higher return on equity of 14.27 in the same period.
At a price of only around $4.30 per share, this stock provides solid earnings and returns. Although it has outperformed in earnings compared to the more expensive Mizumo, the cheaper MTU certainly has it merits, and should work well in your portfolio.
Barclays Plc (BCS)
The key to getting a good purchase is to find stock that is undervalued because of events many people consider to affect the stock, but which in truth do not have an effect on the stock itself. That is how important perception really is.
One such event is the sovereign debt crisis in which European banks were hard hit. Barclays is not as heavily invested in sovereign debt as its competitors, as seen in its earnings, which showed a continuous stream with $0.29 per share and $0.23 in 2010 and 2009, compared to competitor Royal Bank of Scotland Group (RBS), which had no earnings in the past three years (thereby $0.00 earnings per share).
UBS changed its recommendation on BCS to a buy from neutral, as it mentions here. Also, some investors have noted that BCS is only lightly exposed to the sovereign debt crisis, which has led to improvement in its balance sheet on a relative basis. BCS’ market capitalization is $33 billion. It posted a quarterly revenue drop of 0.5%, while competitor Royal Bank of Scotland showed a decline of 24%. Other competitors showed gains: Deutsche Bank (DB) grew 17% and HSBC (HBC) grew 8.5%. BCS’ trailing yearly net income of $4.28 billion also shows promise on a relative basis. RBS shows a net loss of $4.33 billion, and HBC comes in at $15.05 billion. BCS produced an EPS of $1.36, and DB showed $4.19 while HBC showed $4.21. RBS produced a loss per share of $0.78. BCS’ dividend yield is 2.3% currently, and the stock continues to hover near its 52-week low.
AK Steel Holding Corporation (AKS)
During a recession it is important to find a company in an industry that will rebound strongly once the economy picks up. It is also important that the company has strong financial standing to help keep afloat while it improves its revenues. These are aspects you will find in AK Steel Holding.
AK Steel Holding Corporation has strong assets of $4.18 billion with only $651 million in debt. Its competitor, United States Steel Corporation (X) has a significantly larger asset base of $15.34 billion, but it also has higher total debt of $3.76 billion. Nucor Corporation (NUE) has $13.91 billion in assets and total debt of $4.34 billion. When it comes to revenues, the recession has not been kind to stocks, making it difficult for the companies to raise their earnings. Both AK Steel and United States Steel posted negative earnings in 2010 and 2009, with losses of $1.18 per share in 2010 and $0.68 per share in 2009 for AK Steel, and losses of $3.36 per share in 2010 and 10.42 in 2009 for X. Nucor fared better than these two with positive earnings of $0.42 per share in 2010 after a loss of $0.94 per share in 2009.
Banco Santander Brasil (BSBR)
In times of recession, investing in a different location can also prove to be wise, especially if the location is able to sustain operations during the toughest of times. Brazil is a strategic area to invest in, as it is one area of emerging growth in the last few years. However, it is important to find good value in a company before you buy into a stock. Among companies priced below $20, one that stands out is Banco Santander (Brazil) SA, which sella for $8.91 per share. BSBR has one of the highest P/E ratios at 7.35, compared to Banco Bilbao Viscaya Argentaria SA (BBVA), which has a P/E ratio of 5.46 at a price of $7.62. You can also compare this to another bank operating primarily outside of the United States, Banco Bradesco SA, which has a 9.37 price-earnings ratio at a price of $17 per share.
The unique selling point of Banco Santander Brasil is the presence of one of the highest dividend yields: 7.15%. For the last 12 months it had a dividend pay ratio of 103.95%. Their counterpart Banco Bradesco SA had a payout ratio of 20% with a dividend yield of 0.70%. BBVA has a lower dividend yield of 6.00% with a payout ratio of 258%, higher than than both Banco Santander Brasil and Banco Bradesco SA.
Host Hotels & Resorts, Inc. (HST)
Host hotels is a leader in the hospitality business, and with the purchase of the Manchester Grand Hyatt San Diego, it is strategically expanding at a time when it is still cheap to grow its business. Host is the largest company operating in the industry, with market capitalization of $7.55 billion; its closest competitors, Hospitality Properties Trust (HPT) and LaSalle Hotel Properties (LHO), have market capitalizations of $2.76 billion and $1.48 billion, respectively.
Earnings for Host Hotels have been negative the past two years, with a loss of $0.20 and $0.34 per share 2010 and 2009, which has contributed to the downturn in its price. Lasalle Hotel has experienced the same with a loss of 0.35 per share and 0.39 per share, and Hospitality Properties Trust had one-year loss of 0.07% in 2010.
Host Hotel is definitely a buy with the strength of its assets, because they can rely on it to get them over the rough spot of a down real estate market. It has the most assets among the companies with $12.4 billion and total debt of $5.47 billion. You can compare that to LaSalle Hotel Properties, with only $2.35 billion of assets, and Hospitality Properties of $5.19 billion of assets.