In this article, I analyze five relatively low-priced S&P stocks trading under $50 per share. For investors with limited capital, as well as those who want to maximize the value on their investments, I'll look at how the following companies are performing, as well as how they are expected to perform in future.
Cabot Oil & Gas Corporation (NYSE:COG) is an independent oil and gas company in the United States. The company has an estimated 2,761 billion cubic feet of natural gas equivalents.
The company was among the best performing stocks for 2011 and gained almost 100% during the year. On the downside, the company is being sued by 15 families in Pennsylvania in light of accusations of drinking water contamination. Also, a high valuation but small company payouts give investors reasons to worry.
Cabot Oil and Gas will announce its fourth quarter financial results in a conference call to investors on February 20th 2012, giving a final look into the company's performance in 2011. Given gas price weakness, results could be a bit weaker than expected. Last quarter the company missed by one cent, reporting earnings of $0.17 versus estimates of $0.18. Earnings could come in slightly lower than the $0.15 per share estimate. I also expect potential warnings about regulatory risks related to well fracturing, even if they do not come to bear.
The company's shares are trading at around $32 at the time of writing, within a 52-week trading range of $19.74 to $45.00. I would advise that you do your homework about this one very well before investing.
CF Industries Holdings, Inc. (NYSE:CF) manufactures and distributes nitrogen and phosphate fertilizers. The company serves the international agricultural and industrial industries. The company owns a 50% share of GrowHow UK Limited, a plant nutrient manufacturer in the United Kingdom; an ammonia facility in Trinidad and Tobago; and KeyTrade AG, a global plan nutrient trading organization.
CF's stock price has a strong correlation to corn prices. When corn prices rise, farmers need more fertilizer for their crops in order to meet the demand. Therefore, CF sells more fertilizer and makes a higher profit on price increases. The company also benefits from lower natural gas prices as natural gas accounts for 45% of the cost of sales for nitrogen fertilizer. However, this reveals that the company has a very limited control over its production costs and sales prices, which in turn may hinder its future potential. As the U.S. and other North American-focused refining markets switch over to corn-based ethanol for summer gasoline, I expect further demand increases for the fertilizers that CF sells for corn production. This bodes well for the company in the short-run.
CF reported record earnings for the third quarter of 2011. The company's revenue was $330.9 million and earned $4.73 per diluted share, compared to $48.2 million and $0.67 respectively in the prior year's fourth quarter. CF also recorded a quarterly operating cash flow of $1 billion for the first time in its history. The company is growing in multiples of the expected figures and is one to consider as a commodities hedge.
CF is currently trading at about $32 per share within its 52-week range of $19.74 to $45.00.
St. Jude Medical, Inc. (NYSE:STJ) is a worldwide manufacturer and distributor of cardiovascular and implantable neuro-stimulation medical devices.
St. Jude Medical beat its fourth quarter expectations; however its annual profits dropped 21% from the previous year. The company's sales increased by 4% in the fourth quarter as compared to the prior year, but saw a $43 million drop in earnings and a 11 cent fall in EPS. The Department of Justice is currently investigating into the overuse of cardiac rhythm devices which has likely led to the softness in sales. The company also faces the same concerns as other players in the industry, such as pricing pressures and potential cuts in government health care spending. While the DOJ investigation is just that-- an investigation-- I do have longer term concerns regarding device makers like St. Jude.
Shares in St. Jude Medical cost about $41 at the time of writing, within its 52-week trading range of $32.13 to $54.18. Investors should approach this stock with an awareness of the current regulatory climate in this industry, particularly as government gets more involved in consumer healthcare and choice in cardiac devices. Its opportunities lie abroad. New cardiac sheath technology means the company continues to innovate. I expect a renewed focus on its sales presence to meet demand in aging populations in Japan, Korea and China.
Sysco Corporation (NYSE:SYY) sells, markets and distributes food products. The company operates 177 distribution facilities and serves approximately 400,000 customers annually. The company hit a record of sales in excess of $39 billion for its last full fiscal year.
In recent news, Sysco has launched a mobile app called ChefRef. The application provides food lovers with thousands of recipes and assists with meal ideas. I think this is a subtle but excellent move by the company to gear its distribution customers towards the products it sells. The combinations of foods in its application could encourage sales and foodstuff and culinary equipment bundling. The company is attempting to increase its image as a one-stop shop for food distribution.
The stock trades at about $30 at the time of writing. The trading range is $25.09 to $32.76. The narrow range implies the stability of the stock price. Sysco appears to be a safe buy with the potential for steady gains ahead.
AT & T Inc. (NYSE:T) provides telecommunications services to clients and other service providers worldwide. The company has two segments: a wireless segment and an advertising solutions segment. Its wireless segment is the key growth driver and its advertising solutions segment, including white and yellow page directories, is still a cash cow.
On the downside, the company will incur a $4.2 billion charge over its failed bid for T-Mobile. On the bright side, the company met expectations for its fourth quarter profits. The company's revenues are attributed to its smartphone sales, particularly the sale of iPhone and Android models. The company accounts for 20% of all iPhone sales, reportedly activating 7.6 million iPhones in the fourth quarter. I expect AT&T share of the iPhone market to remain steady going forward.
AT&T reported that its total wireless subscriber base rose by 2.5 million, and in 2012 we could see additional growth as weaker rivals like Sprint (NYSE:S) and T-Mobile see attrition to AT&T's network. The company yielded an EPS of 42 cents, only one cent below the analyst average. At the time of writing, AT&T stock sells for about $29 within the 52-week trading range of $27.20 and $31.94. The stock is within the top 91% of its trading range and appears to be a steady buy at the moment.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.