7 Conglomerates To Consider For Your Portfolio

by: Brian Gorban

Stocks trading with favorable valuations are always a good bet to outperform the market, as many value fund managers over the decades have shown us. Here were some I brought up recently that had some great dividends, along with other large-cap stocks here that are great values as well. However, looking at these conglomerates may show great value as well.

General Electric Company (NYSE:GE) operates as a technology, service, and finance company worldwide. This is a company I recently wrote about here and I still feel it has great value at a trailing 12x P/E, 10x forward P/E, .9x PEG, 1.1x P/S, very strong FCF of over $26B this past year, and very nice 3.7% dividend yield. Moreover, with a very low payout ratio below 50%, expect more dividend raises in the future. This is a buy.

Honeywell International (NYSE:HON) operates as a diversified technology and manufacturing company worldwide. The company trades at just over 15x trailing P/E, 12x forward P/E, .8x PEG, 1.1x P/S, over $3.5B in FCF, and respectable 2.7% dividend yield. HON trades at a very low 34% payout ratio, so it's very likely to see continued future dividend increases. I think HON is a buy here.

United Technologies (NYSE:UTX) provides technology products and services to the building systems and aerospace industries worldwide. The company has a trailing P/E under 15x, forward 13x P/E, 1.2x PEG and P/S, FCF in excess of $5B this past year, and nice 2.4% dividend yield. UTX trades at a very low 34% payout ratio as well, so it's very likely to see continued future dividend increases and a nice buy here.

Siemens Aktiengesellschaft (SI), an electronics and electrical engineering company, operates in the industry, energy, and healthcare sectors worldwide. This German based firm gives us some nice international exposure while trading at attractive valuations of a trailing 10x P/E, 9x forward P/E, .3x PEG, .9x P/S and EV/S, approximately $13B in FCF this past year, and 3.7% dividend yield. SI had a payout ratio of 34% as well, so dividend raises in the near future are certainly likely and have me saying SI is a buy.

ABB Ltd. (NYSE:ABB) provides power and automation technologies for utility and industrial customers worldwide. This Switzerland based company gives us cheap foreign exposure at 13x trailing P/E, 10x forward P/E, .9x PEG, 1.1x P/S and EV/S, over $3B in FCF this past year, and 3.5% dividend yield. ABB still has a low 51% payout ratio, so expect the dividend to not only be safe, but raised in the near future-- making this a buy.

Koninklijke Philips Electronics N.V. (NYSE:PHG) engages in the healthcare, consumer lifestyle, and lighting product businesses worldwide. This Netherlands based giant is the riskier one of the bunch as it lost money last year, but analysts expect a strong upcoming year, and the valuations make it worth the gamble at .5x P/S and EV/S, 1x P/B, 5x EV/EBITDA, approximately $2B in FCF this past year, and very nice 5.2% dividend yield. This was approximately a 50% FCF payout ratio, making it real secure and a very nice return while we wait for PHG to return to profitability.

Berkshire Hathaway (NYSE:BRK.B) is a publicly owned investment manager. Through its subsidiaries, the firm primarily engages in the insurance and reinsurance of property and casualty risks business. This is the investment vehicle of investing legend Warren Buffett, which has ownership stakes in dozens of companies and currently trading at a historical cheap price of 16x trailing P/E, 1.2x P/B, 1.3x P/S, 1.5x EV/S, and strong FCF of approximately $12B this past year. The stock famously doesn't pay a dividend, but that's because Buffett does such a wonderful job of compounding earnings. As I brought up before at a lower price, BRK.B is still a buy at these levels.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in BRK.B, GE over the next 72 hours.