It should be an interesting week in the market to begin the second half of the year. We shall soon see if the recent progress in Europe gets built upon or ends up disappointing investors once again. I am tending towards the cautious side. Most of the recent additions to my portfolio have been on the income producing side. I especially like it when I can find a stock with cheap valuations, negative sentiment and a strong dividend yield. If insiders are starting to add to their shares, so much the better. One stock that meets those criteria is Greif (NYSE:GEF).
"Greif, Inc. manufactures and sells industrial packaging products, bulk containers, and containerboard and corrugated products worldwide." (Business description from Yahoo Finance)
6 reasons Greif has solid value at $41 a share:
- GEF has a generous dividend yield of 4.1% and has improved its dividend payout by a combined 50% over the past five years.
- Insiders made their first buys of the year in late June.
- GEF recently entered oversold territory and just bounced off its 52 week low. It also is substantially under its 52 week high of over $67 a share.
- The stock is selling near the bottom of its five year valuation range based on P/S, P/B and P/CF.
- The stock has a reasonable five year projected PEG (1.11) for a four percent yielder. Its forward PE of 10.7 is under its five year average (13.1).
- The stock is under the median analysts' price target of $53. Although the stock has been hit by concerns about Europe, it is important to remember that Greif grew EPS at better than an 8% annual clip over the last five years despite the recession.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in GEF over the next 72 hours.