It's a common misconception to believe that the trading value of a company's stock represents the most accurate fair market representation of a company's worth. Yet value takes its form in multiple ways. There the value that comes in the form of the company's assets [P/B]. There's the value that comes in the form of the company's earnings capability [P/E]. There's the value that the company offers to investors as an income component [Yield]. There's even the value that can be defined in a company's growth potential [PEG].
As seen below, the following companies appear to offer significant value to investors on multiple fronts. Each of these companies have been hit hard over the past few years, and yet each of these companies continued to operate without giving away the future. While undoubtedly these companies have suffered from issues of their own, investors who believe that the hard times are about to end might do well to conduct further research into the following names. All values were taken as of August 6, 2012.
1) First Solar, Inc (FSLR)
|Industry||Utility-Scale Solar Power Plants|
|Market Cap.||$1.66 Billion|
|Fwd. Div. Yield||N/A|
Despite fears of its ability to compete against falling polysilicon prices, First Solar has managed to adapt away from a commodity-based business model into one that offers whole-unit value that comes in the form of completed power plants. This solar leader remains the champion of the thin-film solar panel industry which has dearly struggled in light of Chinese competition. Yet despite losing its competitive edge in the commodity panel market and falling behind on the race for more efficiency, the company's project pipeline has remained robust and profitable.
The company remains marked for failure based on the metrics shown above. With its PEG rate at an unheard of 0.16, the company's growth has been practically scrapped when considering the market value. Trading at less than half its book value, the company is also severely discounted from a cost-basis of its assets.
2) Met Life, Inc. (MET)
|Industry||Group and Individual Insurance|
|Market Cap.||$35.47 Billion|
|Fwd. Div. Yield||2.20%|
MetLife may have not posted the most stellar of quarterly earnings, but the company remains a leader in its respective industry of providing insurance coverage. Industry-wide fears of increasing regulation and an overall negative sentiment towards the industry have continued to hurt insurance providers. MetLife also continues to struggle under its legal status as a bank, but operationally the company has continued to steadily march onward with its business plans.
Now trading at a little over half of its book value, MetLife is also earning at a significantly profitable rate. With a P/E of 5, the company could earn its market worth within 5 years at its current pace. The low PEG ratio also suggests the company's growth rate remains stronger than what the company is being priced at. Above all, investors have the advantage of being paid to hold onto the company while they wait for a meaningful recovery.
Disclaimer: Please refer to my standard disclaimer found here.
Disclosure: I am long FSLR.