Do you prefer investing in the largest and best established stocks? Interested in financial companies? Looking to find stocks that pay reliable dividends? Interested in undervalued stocks? Looking for ways to dig deeper into a company's profitability? For ideas on where to look, we ran a screen you might find interesting.
The forward P/E is a price multiple valuation metric, which is similar to the current P/E ratio, except that it uses the forecasted earnings instead. While this number might not be as accurate because it uses "forecasted" numbers, it does offer the benefit of illustrating analysts' expectations of a firm. If the market believes that earnings will grow moving forward, then the forward P/E should be lower than the current P/E.
Financial Leverage, also known as the Equity Multiplier, illustrates how a firm is financing its assets. The lower the number, the more a firm is financing its assets internally through stockholder equity. The higher this metric, the more the firm is relying on debt to finance its assets.
The Price/Book Value Ratio is a great price-multiple valuation metric to find companies that could be potentially undervalued or overvalued. If a firm has a Price/Book Value Ratio of less than 1, it is stated to be trading below "break up" value. A lower P/BV Ratio can indicate a potentially mis-priced company or indicate that something is fundamentally wrong with it.
The Net Margin is a profitability metric that illustrates, by percentage, how much of every dollar earned gets turned into a bottom line profit. This is just one of many profitability metrics used by investors and analysts to better understand what the company is being left with at the end of the day. Generally, a firm that can expand its net profit margins over a period of time will see its stock price rise as well, due to the trend of increasing profitability. Net Margin = Net Income/Total Revenue.
The Operating Profit Margin is a profitability ratio that measures the effectiveness of the company's operating efficiency. This metric allows investors to see how much profit is left after all variable costs are covered. If the company's margin is increasing over time, this means that it's earning more per dollar of sales. Finding trends in the Operating Profit Margin helps investors identify companies that are improving profitability over time and managing the economic landscape better than competitors.
We first looked for large cap financial dividend stocks. We then looked for companies with a low price-multiple premium (forward P/E<10)(P/BV<1). From here, we then looked for companies that have been able to retain strong profit margins on the bottom line (Net Margin [TTM]>10%)(1-year operating margin>15%).
Do you think these large-cap stocks have what it takes to grow? Use this list as a starting-off point for your own analysis.
1) JPMorgan Chase & Co. (JPM)
| Sector: | Financial |
| Industry: | Money Center Banks |
| Market Cap: | $165.67B |
| Beta: | 1.27 |
JPMorgan Chase & Co. has a Dividend yield of 2.77% and Forward Price/Equity Ratio of 7.75 and Price/Book Value Ratio of 0.87 and Net Margin of 19.05% and Operating Profit Margin of 26.67%. The short interest was 0.74% as of 04/30/2012. JPMorgan Chase & Co., a financial holding company, provides various financial services worldwide. Its Investment Bank segment offers various investment banking products and services, including advising on corporate strategy and structure, capital-raising in equity and debt markets, risk management, market-making in cash securities and derivative instruments, prime brokerage, and research services for corporations, financial institutions, governments, and institutional investors. The company's Commercial Banking segment provides lending, treasury, investment banking, and asset management services to corporations, municipalities, financial institutions, and not-for-profit entities.
2) The Bank of New York Mellon Corporation (BK)
| Sector: | Financial |
| Industry: | Asset Management |
| Market Cap: | $28.43B |
| Beta: | 0.86 |
The Bank of New York Mellon Corporation has a Dividend yield of 2.18% and Forward Price/Equity Ratio of 9.50 and Price/Book Value Ratio of 0.84 and Net Margin of 17.18% and Operating Profit Margin of 24.12%. The short interest was 1.27% as of 04/30/2012. The Bank of New York Mellon Corporation, a financial services company, provides various products and services worldwide.
The company offers a range of equity, fixed income, cash, and alternative/overlay products, as well as distributes investment management products. It also provides investment management, wealth and estate planning, and private banking solutions to high-net-worth individuals and families, charitable gift programs, endowments and foundations, and related entities, as well as offers mutual funds, separate accounts, and annuities.
3) Capital One Financial Corp. (COF)
| Sector: | Financial |
| Industry: | Credit Services |
| Market Cap: | $25.62B |
| Beta: | 1.76 |
Capital One Financial Corp. has a Dividend yield of 0.36% and Forward Price/Equity Ratio of 8.12 and Price/Book Value Ratio of 0.88 and Net Margin of 21.75% and Operating Profit Margin of 29.53%. The short interest was 1.43% as of 04/30/2012. Capital One Financial Corporation operates as the bank holding company for Capital One Bank (USA), National Association (COBNA), and Capital One, National Association (CONA), which provide various financial products and services in the United States, the United Kingdom, and Canada. It offers consumer and small business credit card lending, national closed-end installment lending, and the international credit card lending services.
The company also provides various non-interest bearing and interest-bearing deposits, including demand deposits, money market deposits, negotiable order of withdrawal accounts, savings accounts, certificates of deposit, and other consumer time deposits. Its loan portfolio comprises credit card loans; consumer loans, such as auto, home, and retail banking loans; and commercial loans, including commercial and multifamily real estate, middle market, specialty lending, and small-ticket commercial real estate loans.
4) Fifth Third Bancorp (FITB)
| Sector: | Financial |
| Industry: | Regional - Midwest Banks |
| Market Cap: | $13.24B |
| Beta: | 2.17 |
Fifth Third Bancorp has a Dividend yield of 2.22% and Forward Price/Equity Ratio of 9.41 and Price/Book Value Ratio of 0.98 and Net Margin of 23.52% and Operating Profit Margin of 33.09%. The short interest was 1.07% as of 04/30/2012. Fifth Third Bancorp operates as a diversified financial services holding company in the United States.
The company's Commercial Banking segment offers credit intermediation, cash management, and financial services; lending and depository products; and foreign exchange and international trade finance, derivatives and capital markets services, asset-based lending, real estate finance, public finance, commercial leasing, and syndicated finance for business, government, and professional customers. Its Branch Banking segment provides deposit and loan, and lease products to individuals and small businesses.
*Company profiles were sourced from Finviz. Financial data was sourced from Google Finance and Yahoo Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
