Widespread fear is the market's driver towards opportunity. In these more recent times of volatility, it would be an understatement to suggest the markets have seen their fair share of such fear as of late. Undoubtedly, those investing for the long term have also seen their fair share of opportunity arising from stocks that have been punished unjustly in light of shifting myopic sentiments.
The following five companies in particular retain market leading positions and yet have found themselves trading at prices far below a fair valuation. The following values for market capitalization, forward analyst estimates, and forward P/E ratio's are listed as of 1/16/12. The net tangible assets are based as of the most recent quarterly earnings statement ending September 30, 2011.
|Name||Mkt Cap||NTA||Fwd Est||P/E|
|American Capital (ACAS)||$2.48 B||$4.02 B||$0.86||8.56|
|Transocean (RIG)||$12.98 B||$12.69 B||$3.10||13|
|Corning (GLW)||$22.00 B||$20.75B||$1.69||8.28|
|Arcelor Mittal (MT)||$30.19 B||$44.90 B||$2.35||8.29|
|First Solar (FSLR)||$3.45 B||$3.57 B||$4.19||9.53|
American Capital is a private equity and venture capitalist firm that specializes in buyouts, mezzanine, growth capital, and acquisition financing. AGNC also manages as the parent company of popular mortgage REIT, American Capital Agency Corp (AGNC) and therefore is entitled to fees based on the size of assets under management. ACAS current monitors over $40 billion in assets under management through its various subsidiaries. Yet fears of European exposure, of which the company does have some related financing positions, in light of ongoing uncertainty has cast a dark shadow over ACAS. Several impairment charges and the halt of its dividend has caused the market to value the company at a fraction of its book value. Despite this, the company has still shown itself committed to creating shareholder value. With its intentions to buyback stock until its fairly valued and then to reinstate the dividend, the company has already bought back a significant amount of its shares.
Transocean gained increasing notoriety after the Deepwater Horizon oil spill in April 2010 and its share plummeted over fears for the prospect of a restricted market due to regulation, potential lawsuits losses related to the incident, and poor performance in light of ongoing circumstances. Yet as one of the largest public offshore drilling contractors in the world, Transocean still resides as a king in the future of oil exploration. The company has historically paid a strong dividend, and investors looking to park money in an oil play could do far worst than counting on a recovery in this company.
Corning , as one of the largest American manufacturers of glass, ceramics, and related materials, is a company that can date its history back to 1851. The company is largely correlated to television sales and life science products. Nevertheless, the company is finding increasing importance in the realm of mobile phones via the use of its patented Gorilla Glass. Fears of a slowing global consumer market, particularly for LCD sales, has sent this company's stock price tumbling almost 40% off its 2011 highs. All the while, the company has increased its dividend and insiders have taken on larger positions as the company's cash intake continues to steadily flow.
Arcelor Mittal is the largest steel producing company in the world. The company remains vertically integrated, even operating as a large producer of metallurgical coal and iron ore. With rampant fears of a looming double-dip recession that will lead to severe cut in the demand for steel, the company's share price continues to dwell around the levels of half its current book value. Seemingly priced at levels that indicate the end of steel production as we know it, investors willing to bet on a recovery for Arcelor may be surprised to discover that the company currently sports a healthy 3.3% dividend as well.
First Solar is the leading manufacturer of thin-film photovoltaic solar power systems used on the retail- and utility-sized scale. Fears of an imploding solar market led to the fall of the company's stock by over 75% from supported levels of $150/sh in early 2011. Additional concerns of inventory dumping and the expiration of government subsidies contributed to the decline to the sector's prospects. To top things off, a quick firing of a former CEO helped to spark near panic in this market leading company. Yet throughout it all, First Solar remained remarkably profitable, sporting healthy margins and clearly retaining the position as the market leader in an industry that undoubtedly holds the promise of hope for the future.