8 Beaten-Down Stocks Worth Buying Now

Includes: GE, INTC, JPM, MSFT, PFE, T, VZ, WFC
by: Brian Gorban

There are many indicators I use when analyzing a stock. One is recent insider activity; another is unusual option activity. A third indicator I look for: relatively cheap dividend stocks -- and with the market moving even lower, it has revealed some great stocks worth analyzing.

Telecommunications behemoth AT&T (NYSE:T) continues to show weakness as investors are uncertain about the outcome of the potential $39B T-Mobile acquisition. However, this has presented a nice buying opportunity for long-term, dividend-seeking investors as it trades at just over an 8x P/E, relatively cheap 1.5x P/B, 1.3x P/S, and very secure 6.1% dividend yield. With a rather low payout ratio of 50%, T can continue to look to even raise the dividend going forward, as the firm has been doing fine with or without T-Mobile. I think it's a safe buy.

Fellow telecommunications giant Verizon Communications (NYSE:VZ) has been holding up relatively well to its counterpart above, but still sports a fantastic 5.5% yield. The stock is pricier at a 16.3x P/E, but trades at just under 1x P/S, with considerably less debt (to the tune of just over $12.5B), and an attractive 8.9x EV/FCF. The great dividend looks to continue being raised as its 102% payout ratio is grossly misleading, since it doesn't take into account the massive depreciation this firm writes off annually. The $36.34 closing price is a good entry point.

The big conglomerate General Electric (NYSE:GE) just hit a 52-week low and is trading at compelling valuations along with a 4.1% dividend yield. At an 11.5x P/E, just over 1x P/S, and 1.25x P/B, this stock has become attractive. Moreover, they are going to buy back this month in October those $3B in preferred shares that were sold to Berkshire Hathaway and costing the firm $300M annually in interest payments. This will add an earnings boost as well going forward, and with a payout ratio just over 40%, I'd definitely expect the already respectable 4.1% dividend yield to be raised.

One of the world's largest pharmaceutical companies, Pfizer (NYSE:PFE), is currently trading right near its 52-week low and showing some value to dividend investors with a 4.6% yield. However, the stock isn't cheap enough for me yet, as even though it trades at a decent 16x P/E, it's trading at a relatively expensive 2x P/S, and struggling to find its next blockbuster drug as analysts expect anemic growth of approximately 2%. I'd be a buyer at a 5% dividend yield, translating to $16.

Semiconductor giant Intel (NASDAQ:INTC) looks to have entered the value category and has a sizeable 4.1% dividend yield as well. It trades at 9.5x P/E, 8.9x EV/FCF, over $9B in net cash, and very healthy operating margins above 33% and a return on equity in excess of 25%. Moreover, their payout ratio is approximately 30%, indicating not only a safe dividend, but very likely to be raised again going forward. I'm a buyer at $20.62.

Software titan Microsoft (NASDAQ:MSFT) is experiencing slower growth than its earlier days, but the shares are showing some great value. Trading at just above a 9x P/E, almost $50B in net cash, and 6.9x EV/FCF gives me enough reason to buy. Add in their nice 3.2% yield, which is below a 25% payout ratio, operating margins near 40% and a return on equity near 45%, I think this stock is a buy here at $24.50.

Financial giant JPMorgan Chase (NYSE:JPM) is sitting right near its 52-week low, as financials as a whole continue to get whacked. The company, though, looks tempting at a 6x P/E, .7x P/B, a return on equity in excess of 11%, widely regarded as the best management team of the major money banks with Jamie Dimon. Once there is more clarity going forward, the already sizeable 3.3% yield can look to be hiked considerably, as it currently is at under a 10% payout ratio. Of course, if we wait for things to look rosier, the stock will have most likely moved much higher. I think this is a worthwhile gamble for the long term here at $28.50.

Wells Fargo (NYSE:WFC) would be the other big bank I see as a safe long-term play as well, trading at a 9x P/E, 1x P/B, a return on equity also in excess of 11%, and fantastic management team as well. The dividend is considerably less at 2%, however, it has a payout ratio near 10%, meaning more dividend hikes are expected when the dust settles as well. $23 is a safe entry point, and an investor would do fine splitting his position between these two banks.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in T, JPM, or WFC over the next 72 hours.