Seeking Alpha
Profile| Send Message|
( followers)  

The following is a list of seven low PE companies reporting next week.

No.

Ticker

company

Sector

Market Cap (mn)

Forward

P/E

1

FCX

Freeport-McMoRan Copper & Gold Inc.

Basic Materials

34,019

6.47

2

HAL

Halliburton company

Basic Materials

32,251

7.81

3

INTC

Intel Corporation

Technology

121,403

9.44

4

MSFT

Microsoft Corporation

Technology

227,520

8.61

5

PH

Parker Hannifin Corporation

Industrial Goods

11,017

9.35

6

SNDK

San Disk Corp.

Technology

10,633

9.54

7

UNH

United health Group, Inc.

Healthcare

49,912

9.72

My favorite among above stocks is Microsoft Corporation. Microsoft is engaged in developing, licensing and supporting a range of software products and services. The company also designs and sells hardware, and delivers online advertising to the customers. It operates in five segments: Windows & Windows Live Division, Server and Tools, Online Services Division, Microsoft Business Division, and Entertainment and Devices Division. Microsoft’s EPS forecast for the current year is 2.85 and next year is 3.13. According to the consensus estimates, its top line is expected to grow 6.50% in the current year and 6.90% next year. It is trading at a forward P/E of 8.61. Out of 33 analysts covering the company, 23 are positive and have buy recommendations, one has a sell recommendation and nine have hold ratings.

I find Microsoft very attractive medium term buy at 8.61x next year's EPS. At these levels, I don’t think the market is pricing in any of the positive initiatives the company is taking. Some of the important initiatives that can drive meaningful growth over the next one year are the Windows 8 launch, Office 365, which is gaining traction, and a successful launch of Nokia's (NOK) WP7 phones. In addition, Microsoft’s excess cash position provides a downside cushion. Microsoft recently raised its dividend by 25% and it has significant potential to increase its dividend pay-out ratio further to supports the stock. I think Microsoft offers an attractive risk reward for investors who can hold the stock for the next one year.

For other stocks in the above list, here are some of the specifics about these companies, including a brief description of their business, growth expectations (topline and bottomline):

Freeport-McMoRan Copper & Gold Inc. is a copper, gold and molybdenum mining company. Its portfolio of assets includes the Grasberg minerals district in Indonesia, mining operations in North and South America, and the Tenke Fungurume minerals district in the Democratic Republic of Congo. Freeport-McMoRan’s EPS forecast for the current year is 5.53 and next year is 5.55. According to the consensus estimates, its top line is expected to grow 17.10% in the current year and 2.30% next year. It is trading at a forward P/E of 6.47. Out of 21 analysts covering the company, 16 are positive and have buy recommendations, two have sell recommendations and three have hold ratings.

Halliburton Company is an oilfield services company. The company’s two business segments are the Completion and Production segment and the Drilling and Evaluation segment. The company provides a range of services and products for the exploration, development, and production of oil and natural gas around the world. Halliburton’s EPS forecast for the current year is 3.37 and next year is 4.49. According to the consensus estimates, its top line is expected to grow 35.80% in the current year and 18.50% next year. It is trading at a forward P/E of 7.81. Out of 35 analysts covering the company, 34 are positive and have buy recommendations and one has a hold rating.

Intel Corporation is a semiconductor chip maker company. The company develops advanced integrated digital technology products, primarily integrated circuits, for industries, such as computing and communications. The company’s reportable operating segments are PC Client Group and Data Center Group. It also has non-reportable operating segments, whose product lines are based on Intel architecture: Embedded and Communications Group, Digital Home Group and Ultra-Mobility Group. Intel’s EPS forecast for the current year is 2.36 and next year is 2.45. According to the consensus estimates, its top line is expected to grow 23.80% in the current year and 5.50% next year. It is trading at a forward P/E of 9.44. Out of 51 analysts covering the company, 29 are positive and have buy recommendations, four have sell recommendations and 18 have hold ratings.

Parker-Hannifin Corporation is a full-line diversified manufacturer of motion and control technologies and systems, including fluid power systems, electromechanical controls and related components. Parker-Hannifin’s EPS forecast for the current year is 7.05 and next year is 7.79. According to the consensus estimates, its top line is expected to grow 8.20% in the current year and 4.60% next year. It is trading at a forward P/E of 9.35. Out of 16 analysts covering the company, seven are positive and have buy recommendations and nine have hold ratings.

SanDisk Corporation is engaged in designing, developing and manufacturing data storage solutions in a range of form factors using the flash memory, controller and firmware technologies. SanDisk’s EPS forecast for the current year is 4.44 and next year is 4.66. According to the consensus estimates, its top line is expected to grow 17.60% in the current year and 15.30% next year. It is trading at a forward P/E of 9.54. Out of 23 analysts covering the company, 19 are positive and have buy recommendations, one has a sell recommendation and three have hold ratings.

United Health Group Incorporated is a diversified health and well-being company. The company operates in four segments: Health Benefits, which includes United Healthcare Employer & Individual, United Healthcare Medicare & Retirement and United Healthcare Community & State; Optum Health; Ingenix, and Prescription Solutions. United Health Group’s EPS forecast for the current year is 4.37 and next year is 4.77. According to the consensus estimates, its top line is expected to grow 7.80% in the current year and 6.70% next year. It is trading at a forward P/E of 9.72. Out of 24 analysts covering the company, 18 are positive and have buy recommendations and six have hold ratings.

Source: 7 Low PE Companies Reporting Earnings Next Week