By Larry Gellar
A new article from 24/7 Wall St talks about the 10 most hated companies in America: Facebook, AT&T (NYSE:T), American Airlines' parent, (AMR), Nokia (NYSE:NOK), Goldman Sachs (NYSE:GS), Best Buy (NYSE:BBY), Bank of America (NYSE:BAC), Johnson &Johnson (NYSE:JNJ), Sears (NASDAQ:SHLD) and Netflix (NASDAQ:NFLX). Hate them or not, here are five that, in my opinion, are misplaced on that list. Therefore, investors may be interested in them regardless. Let's see what's been happening with these five stocks that sophistocated investors should be aware of:
Recent performance: Nokia has moved up a bit lately. The stock was trading for just over $4.50 in parts of December, but the current price is closer to $5.25.
Recent headlines: A mishap of sorts has revealed some new information about the hotly anticipated Lumia 900. While CEO Stephen Elop was pretty hush-hush about the new phone at the Consumer Electronics Show, a newsletter to developers was a little more informative. As reported by All Things D, the developer newsletter, the phone will be released in March. On the other hand, comments from a Nokia spokesman says that no release date has been set due to coordination that still needs to happen with AT&T, which will be the only service provider for the new handset. More information about the Lumia 900 can be found here. As described in that article, the phone will run Windows Phone 7.5, but it's hard to understand why Microsoft (NASDAQ:MSFT) is choosing to include Tango as the phone's video conferencing software instead of Skype.
Competitors: Compared with LM Ericsson (NASDAQ:ERIC), Nokia offers a significantly lower price-to-sales ratio, but Nokia also has much lower margins. Nokia's margins are 29.82% gross and 2.50% operating.
Other interesting statistics: NOK stock has a whopping dividend yield of 9.30%.
Best Buy Co., Inc.
Recent performance: A somewhat disappointing holiday season has definitely affected this stock. Shares were going for over $28 in the beginning of December, but the current price is closer to $24.
Recent headlines: Best Buy has a small but interesting restructuring plan in the works. Multiple retail segments are being merged to create a "connectivity business group." Although Best Buy already had Best Buy Mobile, the goal of the new group is to combine Best Buy Mobile with employees who worked more with tablets and similar devices. In fact, the move is in many ways a response to Best Buy's problems this holiday season. Best Buy actually saw same-store sales decline a bit this year, and products such as those related to gaming as well as TVs fared the worst. Meanwhile, Best Buy makes the aforementioned most hated list in part due to a redemption issue. The company essentially ran out of some items that were ordered online but failed to tell customers until it was almost too late. Needless to say, Best Buy has not fared well on customer satisfaction surveys.
Competitors: People are increasingly buying their electronics at Amazon.com (NASDAQ:AMZN) and Wal-Mart (NYSE:WMT). Those stocks have higher price-to-earnings and price-to-sales ratios since many investors feel their business models are worth more of a premium than Best Buy's.
Recent performance: AT&T seems to be recovering nicely from the failed acquisition of T-Mobile. Shares were trading for below $27.50 in parts of November, but now the stock price is over $30.
Recent headlines: AT&T reduced the size of its 364-day revolving line of credit. Here's what AT&T's McCall Butler wrote in an e-mailed statement to Bloomberg: "We determined that $3 billion would be sufficient to meet our cash needs, should we ever need to access this line of credit, which is very unlikely. Our existing $5 billion, four-year agreement remains unchanged." In fact, that second sentence refers to another revolving line of credit that AT&T recently added a year onto. AT&T's also been in the news due to Steve Ballmer's announcement that AT&T would be the sole service provider for the new LTE Windows Phones. In fact, it's a move that reminds some investors of AT&T's original iPhone monopoly. Additionally, AT&T has been aggressive with getting LTE Android phones on the company's wireless network.
Competitors: AT&T has much higher price/earnings-to-growth and price-to-sales ratios than Sprint Nextel (NYSE:S) and Verizon (NYSE:VZ). Meanwhile, Verizon has the best margins out of the three - those numbers are 61.14% gross and 22.35% operating.
Other interesting statistics: AT&T has a very high dividend yield of 5.90%.
Johnson & Johnson
Recent performance: Johnson & Johnson fell below $62 for a part of November, but the stock is now solidly over $65.
Recent headlines: Johnson & Johnson's Janssen division has been in some legal trouble due to its Risperdal drug. Essentially, plaintiffs are arguing that the antipsychotic drug was marketed to children and teenagers despite warnings from the FDA to not do so. In fact, Johnson & Johnson may have failed to publicize possible medical risks from Risperdal as well. It's problems like these that have helped Johnson & Johnson to become one of America's 10 most hated companies according to 24/7 Wall St. Issues with Tylenol, Benadryl and Motrin as well as less common medical treatments have hurt both Johnson & Johnson's reputation and sales. For instance, there's even been a new problem with the company's insulin pumps, which have been malfunctioning according to various reports.
Competitors: Other important drug manufacturers include Abbott Laboratories (NYSE:ABT), Covidien (COV) and Novartis (NYSE:NVS). Those stocks have lower price/earnings-to-growth and price-to-sales ratios, which proves that investors are still willing to pay a premium for JNJ stock. Johnson & Johnson also has very good margins compared with these other companies - those numbers are 68.99% gross and 25.42% operating.
Bank of America Corporation
Recent performance: Although Bank of America temporarily fell below $5 in December, the stock is now at 6.61.
Recent headlines: According to the Sunday Times, Bank of America is looking to sell some of its private equity investments. In fact, that's just one of many moves that Bank of America is contemplating to raise capital. Bank of America is trying to convince the Federal Reserve that it would be able to survive another financial crisis, and here's one recent quote from spokesman Jerry Dubrowski: "We've made significant progress over the last two years to streamline the company, eliminate complexity and strengthen our balance sheet." While the private equity sale is a very real possibility, Bank of America has already explained some emergency measures it could take. One is to sell some of the bank's peripheral branches, and Bank of America also says that it could create a tracking stock for its Merrill Lynch unit.
Competitors: Out of the Big Four (which also includes Wells Fargo (NYSE:WFC), Citigroup (NYSE:C) and JPMorgan Chase (NYSE:JPM), Bank of America has the lowest price-to-sales ratio. Then again, it also has the lowest operating margin.
Other interesting statistics: Bank of America has a high beta of 2.85.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.