Volatile Roundup: 3 Worth Checking Out, 1 Not

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 |  Includes: F, IPG, MS, XRX
by: Takeover Analyst

What follows is a list of companies that have betas greater than 1.5, indicating high volatility. They cover a variety of different industries: automobiles, financials, office equipment, and advertising. Given uncertainty in both the capital markets and broader macroeconomy, analysts are hesitant about financials. Accordingly, Morgan Stanley (NYSE:MS) is the only one of these four that is rated below a "buy".

Ford Motor (F)

Ford is rated a "buy" on the Street and trades at a respective 7.7x and 8.2x past and forward earnings while offering a dividend yield of 1.6%. It has a beta of 2.4.

Consensus estimates for Ford's EPS forecast that it will decline by 3.7% to $1.84 in 2011, decline by 15.8% in 2012, and then grow by 17.4% in 2013. Assuming a multiple of 10x and a conservative 2012 EPS of $1.48, the rough intrinsic value of the stock is $14.18, implying 15.7% upside.

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Morgan Stanley

Morgan Stanley is rated a "hold" on the Street and trades at a respective 15x and 7.8x past and forward earnings while offering a dividend yield of 1.1%. It has a beta of 1.6.

Consensus estimates for Morgan Stanley's EPS forecast that it will grow by 51.6% to $1.91 in 2012 and then by 22% and 19.3% more in the following two years. Assuming a multiple of 9.5x and a conservative 2012 EPS of $1.98, the rough intrinsic value of the stock is $18.81, implying 3.4% upside.

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Xerox (NYSE:XRX)

Xerox is rated a "buy" on the Street and trades at a respective 10.6x and 6.8x past and forward earnings while offering a dividend yield of 2.2%. It has a beta of 1.6.

Consensus estimates for Xerox's EPS forecast that it will grow by 7.4% to $1.16 in 2012, grow by 14.7% in 2013, and then hold flat in 2014. Assuming the multiple holds steady and a conservative 2013 EPS of $1.25, the rough intrinsic value of the stock is $13.25, implying a staggering 68.8% upside.

Click here to find out why Xerox should - and will - be acquired.

Interpublic (NYSE:IPG)

Interpublic is rated a "buy" on the Street and trades at a respective 12.1x and 13.5x past and forward earnings while offering a dividend yield of 2.3%. It has a beta of 1.8.

Consensus estimates for Interpublic's EPS forecast that it will grow by 38.3% to $0.65 in 2011 and then by 15.4% and 24% more in the following two years. Assuming a multiple of 14.3x and a conservative 2012 EPS of $0.71, the stock price is roughly at intrinsic value. Modeling a CAGR of 25.5% for EPS over the next three years and then discounting backwards by a WACC of 9% yields a fair value figure of $11.60, implying 13.2% upside.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.