With the 2011 holiday season complete, many shoppers are looking for a new batch of sales. For Wall Street investors, finding bargains like these means getting shares in companies that are priced below their value. There are deals to be had, and 5 stocks that are currently "on sale" are ConocoPhillips (NYSE:COP), Bank of America Corp (NYSE:BAC), Intel Corp (NASDAQ:INTC), Chevron Corp (NYSE:CVX) and Hess Corp. (NYSE:HES)
Respected by many investors, ConocoPhillips is generally favored for its dividends. In 2012, however, the stock has even more to offer, combining a $2.64 dividend and 3.80% yield with the promise of some healthy gains in share price. Starting to make a bullish climb above both its 50-day and 200-day moving averages, COP is currently sitting at $71.50 (in the middle of its 52-week range of $58.65 to $81.80) and looking to make a challenge at breaking through the top.
While the global economy has been tough on oil & gas companies, the high prices have allowed them to come through very nicely. ConocoPhillips's one-year target estimate is $79.13, offering a potential 10 to 15 percent gain in share price. With the uncertainty of consistent oil supply from the Middle East, demand for domestic oil could increase, pushing up prices and making companies like an extremely good investment.
Bank of America Corp
After dominating the financial landscape for years, Bank of America lost its title of the largest bank in the United States, succumbing to the relentless pressure of the global monetary crisis. Slipping behind competitor JP Morgan (NYSE:JPM) in total assets, Bank of America has been trying to improve its position in order to meet the demands of federal regulators. The problems have forced down the stock price of BAC, leaving investors with the opportunity to values as the company regains its strength.
Currently trading around $7.00 per share, BAC appears poised for something of a renaissance. Although it missed analysts' expectations for the 4th quarter of 2011, its increase of 17.60% in year-to-year quarterly revenue growth and its $0.04 dividend (for a yield of 0.60%) are both promising signs. JP Morgan, for its part, saw its revenue growth slip 16.30% over the same period, although it paid a dividend of $1.00 for a 2.80% yield. Provided that the looming problems in Europe don't have a negative impact in the US, Bank of America is likely to achieve its one-year target of $8.98, making it a potentially good investment.
Almost everyone who owns a computer is familiar with Intel Corp, the leading producer of microprocessors for the industry. As Intel ramps up to conquer the smartphone market, the company appears ready to add move valuable to its already-profitable stock. Already setting a new 52-week high in January, the share price is currently at $25.60, close to breaking through the top of its $19.16 to $25.92 range. After paying a dividend of $0.84 (yield of 3.40%) and posting a solid year-to-year quarterly earnings growth of 17.40%, the company appears to be on the verge of another upward move.
After hitting its 52-week low in August 2011, Intel stock has been on the climb. That move could go even higher as the company attempts to use its technological superiority over rival ARM Holdings (NASDAQ:ARMH) to seize control over the microprocessor market for today's high-end phones. Intel's numbers support its strong position. With a return on equity of 27.21%, a year-to-year quarterly earnings growth of 17.40% and a levered free cash flow of $8.04 billion, the company appears financially poised to support its ambitious plans. Investors who are looking for a tech holding should consider Intel at this time in order to capitalize on its anticipated growth.
Saying that a stock is "on sale" doesn't reflect on its relative price. This refers to a stock that is trading below its potential value, regardless of whether it trades for pennies or thousands of dollars. This is certainly true for Chevron Corp. This California-based oil & gas company is riding some solid fundamentals and an excellent balance sheet to put itself in position for another significant climb. Trading at $106.83, the stock is near the top of its 52-week range ($86.68 to $110.99) and its dividend of $3.24 (yield - 3.00%) and its forward P/E of 8.21 suggests that they company is likely to continue its strong performance.
Chevron offers a return on equity of 24.20% and a revenue growth of 26.20%. The company is coming off a solid 2011 with year-to-year quarterly earnings growth of 107.80%. Widely held by institutions, (64.30%) the expectation is that CVX can make its one-year target estimate of $124.95 and smash its 52-week high. Although it is hard to predict the effect of volatile oil prices, Chevron appears to be a relative bargain at its current price.
Another oil & gas company that appears very promising is Hess Corp. HES is up 8.00% since September, and appears ready to challenge the upper end of its range over the next year. In spite of a 74.20% drop in quarterly earnings, the $20.75 billion market cap company is still paying a dividend ($0.40 for a 0.70% yield) and has a forward P/E of 8.89. Priced around $60 per share, HES is below its 52-week midpoint, ($46.66 to $87.40) but analysts are pointing to its one-year target of $83.79 (a potential 25% increase) as an indication that the stock is ready to run.
With 77% of its shares held by institutions and 10% by insider, the company looks like a prime investment candidate. Many point to insider purchases of 185,000 shares of HES stock in the past six months as an indication that things are improving. Although the company is -$2.57 billion in levered free cash flow, the uncertainty of global oil supply should be a factor in helping HES to climb.
Finding On-Sale Stocks
Finding an on-sale stock is dependent on understanding the relationship between its share price and the relative value it has. Solid companies with growth potential can offer profits to investors regardless of the current cost of their stock. For investors looking to add holdings like this, ConocoPhillips, Bank of America Corp, Intel Corp, Chevron Corp and Hess Corp all offer very promising options.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.