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For this article, I would like to highlight seven stocks that I feel are very undervalued and have a high book value compared with their current price per share. Whether you choose to own the stock outright or purchase call options, these stocks look to be a great value to buy right now.

The main requirements to make this list is that the company must be stable and also have a market capitalization over $10 billion dollars. I am also taking into consideration stocks that are well off their 52-week highs and should provide a significant ROI. When combining these parameters, I feel the following stocks in this article are great choices heading into 2012.

I already own long-term call options on some of the names listed here and may add to my position this week.

1.) Arcelor Mittal (NYSE:MT)

Arcelor Mittal operates as an integrated steel and mining company. The company serves global carbon steel markets, including automotive, construction, household appliances, and packaging. It offers commodity steel, long, flat, carbon steel, and alloy products.

Arceor Mittal is currently trading at $19.06/share. The 52-week range is $14.77 - $38.88.

52-wk high: 38.88
52-wk low: 14.77
EPS: 1.81
PE: 10.70
Div Rate: 0.6375
Yield: 3.3447
Market Cap: 29.52 B
Volume: 6.33 M

Areclor Mittal has really been beaten down over the past year. Along with Alcoa (NYSE:AA), these are two steel stocks that I feel will be trading much higher in 2012 than their current price.

A look at Arecelor Mittal's balance sheet shows a book value of $38.47 per share.

Balance Sheet
Total Cash (mrq): 2.80B
Total Cash Per Share (mrq): 1.81
Total Debt (mrq): 27.69B
Total Debt/Equity (mrq): 43.69
Current Ratio (mrq): 1.49
Book Value Per Share (mrq): 38.47
Income Statement
Revenue (ttm): 92.22B
Revenue Per Share (ttm): 59.84
Qtrly Revenue Growth (yoy): 22.60%
Gross Profit (ttm): 6.94B
EBITDA (ttm)6: 11.64B
Net Income Avl to Common (ttm): 2.57B
Diluted EPS (ttm): 1.51
Qtrly Earnings Growth (yoy): -51.20%

Over the past year, Arcelor Mittal has seen the following recommendation from analysts:

11-Oct-11 Upgrade Dahlman Rose Hold → Buy $34
26-Aug-11 Reiterated Deutsche Bank Hold $38.50 → $24.50
25-Mar-11 Initiated RBC Capital Mkts Outperform
27-Oct-10 Reiterated Deutsche Bank Hold $38 → $36

Price Target Summary

Mean Target: 30.71
Median Target: 30.54
High Target: 35.00
Low Target: 24.50
No. of Brokers: 9

Arcelor Mittal is off almost 50% from its 52-week high. If the stock is not trading at $30.00+/share by next year at some point, I would be extremely surprised. At the minimum, I would expect to see the stock at $25.00/share.

Key Dates/Additional information for Arcelor Mittal

  • Arcelor Mittal is scheduled to report earnings next on February 2, 2012.
  • Has a current short-interest of 1.65%, which is very low.

I currently like the January 2013 $23.00 strike call options.

2.) JP Morgan Chase & Co. (NYSE:JPM)

JP Morgan Chase provides various financial services worldwide. Its Investment Bank segment provides various investment banking products and services, including advising on corporate strategy and structure, capital-raising in equity and debt markets, risk management, market-making in cash securities and derivative instruments, prime brokerage, and research services serving corporations, financial institutions, governments, and institutional investors.

JP Morgan is currently trading at $33.08/share. The 52-week range is $27.85 - $48.36.

52-wk high: 48.36
52-wk low: 27.85
EPS: 4.69
PE: 7.20
Div Rate: 1.00
Yield: 2.9412
Market Cap: 125.66 B
Volume: 7.62 M

JP Morgan I feel represents very little risk at its current price, but plenty of upside. It is currently near its 52-week low and has a lot of room to move higher. Here is a closer look at JP Morgan's balance sheet:

Balance Sheet
Total Cash (mrq): 900.19B
Total Cash Per Share (mrq): 237.04
Total Debt (mrq): 741.48B
Total Debt/Equity (mrq): N/A
Current Ratio (mrq): N/A
Book Value Per Share (mrq): 45.95
Cash Flow Statement
Operating Cash Flow (ttm): 67.63B
Levered Free Cash Flow (ttm): N/A
Income Statement
Revenue (ttm): 93.43B
Revenue Per Share (ttm): 23.78
Qtrly Revenue Growth (yoy): 3.60%
Gross Profit (ttm): 102.69B
EBITDA (ttm)6: N/A
Net Income Avl to Common (ttm): 18.55B
Diluted EPS (ttm): 4.69
Qtrly Earnings Growth (yoy): -3.50%

Over the past year, JP Morgan has seen the following recommendations from analysts:

14-Oct-11 Reiterated UBS Buy $49 → $44
10-Oct-11 Reiterated Oppenheimer Outperform $51 → $48
14-Sep-11 Reiterated RBC Capital Mkts Outperform $54 → $50
13-Sep-11 Upgrade Stifel Nicolaus Hold → Buy $40
07-Sep-11 Reiterated Oppenheimer Outperform $62 → $51
20-May-11 Initiated Stifel Nicolaus Hold
04-May-11 Initiated UBS Buy $54
14-Apr-11 Reiterated FBR Capital Outperform $53 → $56
04-Apr-11 Reiterated Deutsche Bank Buy $52 → $54
27-Jan-11 Reiterated Oppenheimer Outperform $63 → $61
18-Jan-11 Reiterated RBC Capital Mkts Outperform $47 → $53
18-Jan-11 Reiterated FBR Capital Outperform $45 → $53
22-Dec-10 Reiterated Oppenheimer Outperform $60 → $63

As you can see, even the lowest price targets for the stock have it well above where it is currently trading at.

Price Target Summary

Mean Target: 46.67
Median Target: 46.50
High Target: 58.00
Low Target: 35.00
No. of Brokers: 30

JP Morgan is currently down over 30% from its 52-week high. I fully expect the stock to be trading above $42.00+/share at some point next year. Along with Citigroup (NYSE:C) and Barclays (NYSE:BCS), and Goldman Sachs (NYSE:GS), and Wells Fargo (NYSE:WFC), these financial stocks also look to be the safest investments.

Key Dates/Additional information for JP Morgan

  • JP Morgan is scheduled to report earnings on January 9, 2012.
  • The stock has an extremely low short-interest of 1.1%.

I will be adding to my position with January 2013 $37.00 call options.

3.) Transocean Ltd. (NYSE:RIG)

Transcoean provides offshore contract drilling services for oil and gas wells worldwide. It offers deepwater and harsh environment drilling, oil and gas drilling management, and drilling engineering and drilling project management services.

Transocean is currently trading at $43.37/share. The 52-week range is $41.28 - $85.98.

52-wk high: 85.98
52-wk low: 41.28
EPS: -1.26
PE: N/A
Div Rate: 2.37
Yield: 5.2214
Market Cap: 13.9 B
Volume: 2.3 M

Transocean is another stock that is trading near its 52-week low. This stock could possibly double by this time next year. Of all oil stocks, Transocean is my top choice to rise substantially in share price, along with Apache (NYSE:APA).

Here is a look at Transocean's balance sheet:

Balance Sheet
Total Cash (mrq): 3.29B
Total Cash Per Share (mrq): 10.27
Total Debt (mrq): 11.12B
Total Debt/Equity (mrq): 53.24
Current Ratio (mrq): 1.54
Book Value Per Share (mrq): 65.10
Cash Flow Statement
Operating Cash Flow (ttm): 2.02B
Levered Free Cash Flow (ttm): 221.62M
Income Statement
Revenue (ttm): 8.96B
Revenue Per Share (ttm): 27.99
Qtrly Revenue Growth (yoy): -1.70%
Gross Profit (ttm): 4.46B
EBITDA (ttm)6: 2.89B
Net Income Avl to Common (ttm): -548.00M
Diluted EPS (ttm): -1.25
Qtrly Earnings Growth (yoy): N/A

Over the past year, Transocean has seen the following analysts recommendations:

30-Nov-11 Reiterated UBS Buy $65 → $62
30-Nov-11 Downgrade Argus Buy → Hold
22-Nov-11 Resumed Dahlman Rose Buy $85 → $61
21-Nov-11 Reiterated Barclays Capital Overweight $71 → $67
04-Nov-11 Upgrade Global Hunter Securities Sell → Reduce $45 → $46
04-Nov-11 Reiterated UBS Buy $72 → $65
04-Nov-11 Downgrade Morgan Keegan Outperform → Mkt Perform $60 → $48
05-Aug-11 Upgrade Global Hunter Securities Neutral → Accumulate $63
05-Aug-11 Reiterated UBS Buy $80 → $72
17-Jun-11 Upgrade Morgan Keegan Mkt Perform → Outperform $76 → $75
17-Jun-11 Reiterated Canaccord Genuity Hold $85 → $82
13-Jun-11 Upgrade Argus Hold → Buy $85
09-May-11 Reiterated UBS Buy $88 → $85
04-May-11 Upgrade Global Hunter Securities Reduce → Neutral
29-Apr-11 Initiated Canaccord Genuity Hold $85
25-Apr-11 Reiterated Barclays Capital Overweight $92 → $84
15-Apr-11 Downgrade Howard Weil Market Outperform → Market Perform $90 → $93
09-Mar-11 Initiated Morgan Keegan Mkt Perform $87
08-Mar-11 Initiated Dahlman Rose Buy $98
25-Feb-11 Reiterated FBR Capital Outperform $96 → $103

Most analysts have the stock trading much higher than its current price. Again, this is a very low-risk play in my opinion.

Price Target Summary

Mean Target: 63.14
Median Target: 64.00
High Target: 80.00
Low Target: 44.00
No. of Brokers: 35

Transocean is down over 47% from its 52-week high. This represents a great buying opportunity at its current price. I am expecting to see Transocean o be trading over $60.00/share within the next year. However, I will not be surprised to see it trading much higher than that.

Key Dates/Additional information for Transocean

  • Transocean is scheduled to release earnings on February 23, 2012.
  • The current short-interest is just over 2%.

4.) CME Group Inc. (NASDAQ:CME)

CME Group operates the CME, CBOT, NYMEX, and COMEX regulatory exchanges worldwide. The company provides a range of products available across various asset classes, including futures and options on interest rates, equity indexes, energy, agricultural commodities, metals, foreign exchange, weather, and real estate.

Currently, CME Group is trading at $244.50/share. The 52-week range is $235.23 - $328.00.

52-wk high: 328.00
52-wk low: 235.23
EPS: 18.85
PE: 13.40
Div Rate: 5.60
Yield: 2.2121
Market Cap: 16.27 B
Volume: 207.42 k

CME group has been hit really hard lately. The MF Global scandal certainly did not help the stock. CME is a great company that I feel is trading at a huge discount right now.

Here is a closer look at their balance sheet and additional information about the finances of the company:

Balance Sheet
Total Cash (mrq): 875.90M
Total Cash Per Share (mrq): 13.19
Total Debt (mrq): 2.11B
Total Debt/Equity (mrq): 10.06
Current Ratio (mrq): 1.15
Book Value Per Share (mrq): 315.54
Cash Flow Statement
Operating Cash Flow (ttm): 1.39B
Levered Free Cash Flow (ttm): 1.26B
Income Statement
Revenue (ttm): 3.31B
Revenue Per Share (ttm): 49.57
Qtrly Revenue Growth (yoy): 19.20%
Gross Profit (ttm): 3.00B
EBITDA (ttm)6: 2.37B
Net Income Avl to Common (ttm): 1.26B
Diluted EPS (ttm): 18.86
Qtrly Earnings Growth (yoy): 29.40%

Over the past year, CME Group has received the following analysts recommendations:

02-Nov-11 Reiterated Barclays Capital Equal Weight $360 → $352
29-Jul-11 Reiterated UBS Buy $318 → $325
10-Jun-11 Upgrade UBS Neutral → Buy $318 → $318
07-Mar-11 Reiterated Stifel Nicolaus Buy $330 → $360
04-Mar-11 Reiterated UBS Neutral $311 → $318
11-Jan-11 Reiterated Barclays Capital Equal Weight $312 → $347
07-Jan-11 Downgrade Deutsche Bank Buy → Hold $320 → $320
05-Jan-11 Reiterated UBS Neutral $288 → $311
02-Dec-10 Reiterated Barclays Capital Equal Weight $307 → $312

Eve the lowest estimates have CME Group trading above $300.00/share, and this is exactly where I see this stock at some point in 2012.

Price Target Summary

Mean Target: 319.69
Median Target: 320.00
High Target: 380.00
Low Target: 280.00
No. of Brokers: 19

Key Dates/Additional information for CME Group

  • CME Group is scheduled to report earnings on January 30, 2012
  • has a short-interest just over 2%

The January 2013 $270.00 strike call options will bring a very substantial profit when the stock rebounds.

5.) Yingli Green Energy Holding (NYSE:YGE)

Yingli Green Energy engages in the design, development, manufacture, marketing, sale, and installation of photovoltaic (PV) products in the People's Republic of China and internationally.

Currently, Yingli Green Energy is trading at $4.50/share. The 52-week range is $2.75 - $13.59.

52-wk high: 13.59
52-wk low: 2.75
EPS: 0.53
PE: 8.50
Div Rate: N/A
Yield: N/A
Market Cap: 702.14 M
Volume: 704.25 k

Yingli Green Energy, like all solar stocks, has really been beaten up. Both Yingli Green Energy and Trina Solar (NYSE:TSL), in my opinion, are the best plays in solar for the next year. They are both trading at a huge discount at these prices.

Here is a closer look at Yingli Green Energy's balance sheet and other important information:

Balance Sheet
Total Cash (mrq): 935.33M
Total Cash Per Share (mrq): 5.91
Total Debt (mrq): 2.18B
Total Debt/Equity (mrq): 125.95
Current Ratio (mrq): 1.03
Book Value Per Share (mrq): 9.01
Income Statement
Revenue (ttm): 2.55B
Revenue Per Share (ttm): 16.25
Qtrly Revenue Growth (yoy): 29.70%
Gross Profit (ttm): 630.19M
EBITDA (ttm)6: 417.09M
Net Income Avl to Common (ttm): 171.31M
Diluted EPS (ttm): 1.07
Qtrly Earnings Growth (yoy): N/A

Over the past year, Yingli Green Energy has received the following analysts recommendations:

28-Sep-11 Reiterated Auriga Sell $3 → $2
15-Sep-11 Initiated Auriga Sell $3
22-Aug-11 Upgrade Avian Negative → Positive $7.50
28-Jun-11 Upgrade Brean Murray Hold → Buy $10
22-Jun-11 Initiated Brigantine Hold
20-May-11 Reiterated Collins Stewart Buy $17 → $13
11-Apr-11 Reiterated Auriga U.S.A Buy $18 → $14.50
08-Mar-11 Initiated Brean Murray Hold
11-Jan-11 Reiterated Auriga U.S.A Buy $13 → $17

Price Target Summary

Mean Target: 4.58
Median Target: 4.00
High Target: 9.40
Low Target: 1.00
No. of Brokers: 24

While there is certainly some risk owning Yingli Green Energy, I feel the upside outweighs the downside. If you decide to buy any stock or call options, I would not panic on any downturn. Instead, I would add to the position to average down. Yingli Green Energy definitely has the possibility of trading over $10.00/share.

Key Dates/Additional information for Yingli Green Energy

  • Yingli Green Energy is scheduled to report earnings on February 13, 2012.
  • here is a massive short-interest of 17.7% (hedge funds especially have decimated solar stocks lately.)

I will be purchasing additional June 2012 $5.00 strike call options.

6.) Barclays PLC (BCS)

Barclays PLC provides various financial products and services in Europe, the United States, Africa, and Asia. It offers retail and commercial banking, credit cards, investment banking, wealth management, and investment management services.

Barclays is currently trading at $11.20/share. The 52-week range is $8.38 - $21.69.

52-wk high: 21.69
52-wk low: 8.38
EPS: 1.08
PE: 11.20
Div Rate: 0.251088
Yield: 2.0872
Market Cap: 34.14 B
Volume: 4.45 M

Barclays PLC is nearing its 52-week low and definitely has a lot of room to move up. In 2012, the stock should be able to reach $16.00/share. Eventually, and I believe sooner rather than later, the eurozone mess is going to clear up. When it does, Barclays PLC stands to benefit tremendously.

Here is a closer look at Barclays' balance sheet and other important information:

Balance Sheet
Total Cash (mrq): 1.32T
Total Cash Per Share (mrq): 441.98
Total Debt (mrq): 1.37T
Total Debt/Equity (mrq): N/A
Current Ratio (mrq): N/A
Book Value Per Share (mrq): 26.96
Cash Flow Statement
Operating Cash Flow (ttm): -58.46B
Levered Free Cash Flow (ttm): N/A
Income Statement
Revenue (ttm): 40.22B
Revenue Per Share (ttm): 13.55
Qtrly Revenue Growth (yoy): -0.50%
Gross Profit (ttm): N/A
EBITDA (ttm)6: N/A
Net Income Avl to Common (ttm): 4.11B
Diluted EPS (ttm): 1.30
Qtrly Earnings Growth (yoy): -38.40%

Over the past year, Barclays PLC has received the following analysts price target:

Price Target Summary

Mean Target: 18.53
Median Target: 18.53
High Target: 18.53
Low Target: 18.53
No. of Brokers: 1

I think this is a very accurate price target for Barclays PLC, but even it the stock reached $16.00/share it would still represent a very good ROI.

Key Dates/Additional information for Barclays PLC

  • Barclays PLC's next earnings release is scheduled for February 15, 2012.
  • The short-interest is at a miniscule 0.26%

I currently like the January 2013 $12.50 strike call options.

7.) Goldman Sachs Group, Inc. (GS)

Goldman Sachs provides investment banking, securities, and investment management services to corporations, financial institutions, governments, and high-net-worth individuals worldwide. Its Investment Banking segment offers financial advisory, including advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense, risk management, restructurings, and spin-offs.

Currently, Goldman Sachs is trading at $99.92. The 52-week range is $84.27 - $175.34.

52-wk high: 175.34
52-wk low: 84.27
EPS: 6.36
PE: 16.50
Div Rate: 1.40
Yield: 1.3317
Market Cap: 49.19 B
Volume: 9.22 M

Goldman Sachs is a stock that should not be trading under $100.00/share. This is an extremely solid company, whether you like them or not, that always manages to come out on top.

Goldman Sach's balance sheet is impressive as well, as seen here:

Balance Sheet
Total Cash (mrq): 835.87B
Total Cash Per Share (mrq): 1,697.84
Total Debt (mrq): 491.64B
Total Debt/Equity (mrq): 687.01
Current Ratio (mrq): 1.47
Book Value Per Share (mrq): 135.98
Income Statement
Revenue (ttm): 31.40B
Revenue Per Share (ttm): 58.94
Qtrly Revenue Growth (yoy): -59.70%
Gross Profit (ttm): 39.16B
EBITDA (ttm)6: N/A
Net Income Avl to Common (ttm): 3.76B
Diluted EPS (ttm): 6.57
Qtrly Earnings Growth (yoy): N/A

Golman Sach's has received the following analysts recommendation over the past year:

19-Oct-11 Reiterated UBS Buy $150 → $140
07-Sep-11 Downgrade Oppenheimer Outperform → Perform $173
14-Jun-11 Initiated RBC Capital Mkts Underperform $132
04-May-11 Initiated UBS Buy $200
29-Apr-11 Reiterated Oppenheimer Outperform $200 → $205
27-Jan-11 Reiterated Oppenheimer Outperform $207 → $200
20-Jan-11 Reiterated FBR Capital Outperform $180 → $190

I fully expect this stock to be trading in the $130s, at least, by mid-June of 2012. Here is a closer look at other price targets:

Price Target Summary

Mean Target: 138.13
Median Target: 140.00
High Target: 181.00
Low Target: 100.00
No. of Brokers: 23

Key Dates and Additional Information

  • Goldman Sachs is scheduled to report earnings on January 16, 2012.
  • There is a 1.63% short-interest.

Since I feel this stock will rebound relatively soon, I will be purchasing July 2012 $110.00 strike call options.

Source: 7 Undervalued Stocks To Own For 2012 That Are Trading Below Book Value