In this article, I will analyze five S&P 500 stocks valued under $100 to consider investing in. The companies mentioned here are interlinked in that they are all dependent on metals (specifically, titanium) in their respective industries, mainly transport-related industries, healthcare products and the provision of titanium itself.
CSX Corporation (CSX) provides rail-based transportation services and offers traditional rail services, and the transportation of intermodal containers and trailers. The company has a network of about 50 terminals over 21,000 miles, operates approximately 4,000 trains and also performs drayage services and trucking dispatches.
CSX recently announced fourth quarter earnings for 2011. EPS was recorded at 23 cents per share, 13.2% higher than the previous-year quarter. The EPS for the full year was 24% higher than 2010, a rise from $0.38 to $0.43 per share.
The company has shown growth each year, as a result of the higher demand in rail freight services. The rising demand will also bring about further investments into the company's services, with the continued expansion of its railway network and investment into coal. A few red flags to watch out for in the company are increasing competition, strict railroad regulations and a unionized workforce.
The stock is trading at around $23 at the time of writing, within a 52-week trading of $17.69 to $27.06. In my opinion, CSX Corporation stock is a safe buy that will continue to see benefits in the future, particularly from its strategic position as a shipper of titanium ore in southeastern U.S. markets.
The Boeing Company (BA) is involved in the designing, development, manufacturing, sales and support of commercial jetliners, military aircraft, satellites, missile defense and space flight.
Boeing recently received an order for 100 737 MAX airplanes and 22 Next-Generation 737-800s in an $11.4 billion dollar deal with Norwegian Airlines. The company has reported high numbers for its fourth quarter results thanks to the company's rising orders and deliveries of commercial airplanes. Boeing reported an EPS of $1.84, beating expectations and its 2010 fourth quarter EPS of $1.56. This proves that Boeing holds its position as the largest aircraft manufacturer in the world with expected revenues of around $79 billion for 2012. Few investors realize that its flagship 787 uses a whopping 15% titanium in its structural make-up. Boeing's use of advanced composites and lighter, stronger metals should give it a leg up over competitors on the efficiency front.
The stock is trading at around $75 at the time of writing within the 52-week trading range of $56.01 to $80.65. The company is holding strong and its stock looks like a secure and profitable buy at the moment.
BorgWarner Inc. (BWA) manufactures and sells engineered automotive systems and components (mainly for powertrain applications) worldwide. The company operates 59 manufacturing and technical facilities in 19 countries. BorgWarner's clients include VW/Audi, Ford (F), Toyota (TM), Renault/Nissan and General Motors (GM), among others. The company develops products to improve fuel economy, reduce emissions and enhance performance, such as: Electric air pumps, turbo actuators, exhaust coolers, tubes, valves and diesel applications. Its use of titanium is at the center of a patent infringement dispute with Cummins (CMI) regarding a cast titanium compressor wheel and a method of making turbochargers with the wheel. BorgWarner also has a design patent (lasting 14 rather than the usual 20 years) and received a settlement of $32 million from Honeywell (HON) due to similar potential infringement claims.
The company's latest generation of turbochargers power the new 1.6L Energy dci 130 diesel Renault engines. The turbochargers help the engines reduce CO2 emissions to less that 115 g/km (185g/mile), setting new high standards for lower CO2 emissions. The engine saw its debut in 2011 in the European Scenic and Grand Scenic models and is intended for Renault's and Nissan's mid-range C-segment vehicles. BorgWarner expects earnings growth of between 23% to 27% per share in 2012 backed by new orders. Based on expectations and the company's strong footing in the industry, I would say prospects are looking good for investors.
Company shares are trading at about $74 at the time of writing, within a 52-week trading range of $54.59 and $77.70.
Boston Scientific Corporation (BSX) manufactures, develops and markets medical devices such as heart and cardiac monitors, coronary stents and products used to treat atherosclerosis. A key component in its products going forward will be titanium, given widespread allergies to aluminum and other metals. Sophisticated investors should note the use of titanium in higher risk, product dependent procedures like coronary and brain stent implants.
Boston Scientific plans to launch 24 new products this year and to grow its business in China and India. The company also completed several acquisitions last year and also sold its Neurovascular business to Stryker Corporation. The company plans to increase profits by cutting costs and launching new products. Boston received judgment in its favor over a suit with Johnson & Johnson (JNJ), in a claim that Boston had infringed on patents. The company also received approval from healthcare officials after completing successful trials on its Alair Bronchial Thermoplasty system for treating adult patients with severe asthma. With strategic acquisitions and continued product development, the green light is on for investing in Boston. The release of its fourth quarter results and financial reports for 2011 should confirm this.
Boston Scientific shares are trading at about $6 per share at the time of writing, within a 52-week trading range of $5.01 to $7.96.
Titanium Metals Corporation (TIE) mills, manufactures and sells titanium and titanium alloys. The company operates globally and its customers include the following: Commercial and military aerospace sectors, chemical processors, oil and gas companies, sporting goods providers, the healthcare industry, and the automotive and power generation sectors.
The company has shown a mixed performance lately but still appears to be doing well when compared to industry competitors. Titanium Metals have also shown positive earnings over the past five years and a positive free cash flow over the past four years. Financial strength places the company in a good position to take advantage of opportunities to expand and strengthen its position in the market. Therefore, Wall Street analysts remain bullish about the stock and expect EPS growth rates of 15% in the future, while the company's EPS currently sits at $0.61. Furthermore, the company has extended its supply agreement with Boeing through to December 31st 2018. This shows that Titanium Metals will be contributing to Boeing's success, as mentioned above, and both stocks look like a favorable buy to investors.
At the time of writing, Titanium Metals is trading at around $15 per share, within its 52-week trading range of $13.28 to $20.69.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.