Large cap stocks are often viewed as having already reached the pinnacle in terms of growth. As a result, investors who seek out growth opportunities usually stick with the smaller sized companies. However, by carefully watching stocks at the large cap level, there are opportunities for the investor to reap gains. That is especially true when a stock appears to be trading below market value. The idea is that in time the market will correct, and the stock price will rise. With this idea in mind, we searched for large cap stocks that appear to be offered at a discount. Additionally, all of the stocks in our list today have received recent 'Buy' ratings from industry analysts. Take a look at our findings to begin your research.
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 is 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 mispriced company or indicate that something is fundamentally wrong with it.
We first looked for large cap stocks. Then we screened for businesses that analysts rate as "Buy" (2 < mean recommendation < 3). Next, we screened for businesses with a low price-multiple premium (forward P/E<10)(P/BV<1). We did not screen out any sectors.
Do you think these large-cap stocks have what it takes to grow? Use our list along with your own analysis.
1) American International Group, Inc. (AIG)
|Industry||Property & Casualty Insurance|
|Forward Price/Earnings Ratio||9.91|
|Price/Book Value Ratio||0.57|
American International Group, Inc. engages in the provision of insurance products and services for the commercial, institutional, and individual customers in the United States and internationally. The company operates in three segments: Chartis, SunAmerica Financial Group, and Aircraft Leasing. The Chartis segment offers casualty insurance products that cover general liability, commercial automobile liability, workers' compensation, excess casualty, and crisis management coverages; industrial and commercial property insurance products and energy, which covers man-made and natural disaster exposures; environmental, political risk, trade credit, surety, marine, and aerospace insurance products; and various forms of professional liability insurance products.
It also provides personal accidental and supplemental health products, including accidental death and disability, accidental medical reimbursement, hospital indemnity, and medical excess; travel insurance products and services; automobile, homeowners, and extended warranty insurance; and life insurance products. This segment distributes its insurance products and services through brokers, agents, and wholesalers. The SunAmerica Financial Group segment offers term life, universal life, accident & health, fixed and variable deferred annuities, fixed payout annuities, mutual funds, and financial planning products and services. It distributes its products through banks, broker-dealers, financial advisors, independent marketing organizations, insurance agents, structured settlement brokers, benefit consultants, and direct-to-consumer platforms. The Aircraft Leasing segment acquires and leases commercial jet aircraft to airlines. The company is also involved in the issuance of residential mortgage guaranty insurance that covers mortgage lenders, as well as derivatives intermediary activities. American International Group, Inc. was founded in 1967 and is based in New York, New York.
2) Kinross Gold Corporation (KGC)
|Forward Price/Earnings Ratio||8.94|
|Price/Book Value Ratio||0.81|
Kinross Gold Corporation, together with its subsidiaries, engages in mining and processing gold ores. It is also involved in the exploration and acquisition of gold bearing properties. The company's gold production and exploration activities are carried out principally in Canada, the United States, the Russian Federation, Brazil, Ecuador, Chile, Ghana, and Mauritania. As of December 31, 2011, its proven and probable mineral reserves included 62.6 million ounces of gold, 84.9 million ounces of silver, and 1.4 billion pounds of copper. The company was founded in 1972 and is based in Toronto, Canada.
3) The Bank of New York Mellon Corporation (BK)
|Forward Price/Earnings Ratio||9.31|
|Price/Book Value Ratio||0.77|
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. In addition, the company provides global custody and fund, securities lending, investment manager outsourcing, performance and risk analytics, alternative investment, securities clearance, collateral management, corporate trust, broker-dealer, and employee investment plan services, as well as clearing services and global payment/working capital solutions to institutional clients.
Further, it offers American and global depositary receipt programs, cash management solutions, payment services, liquidity services, foreign exchange, global clearing and execution, managed account services, and global prime brokerage solutions to corporations, public funds, government agencies, foundations, and endowments; global financial institutions, including banks, broker-dealers, asset managers, insurance companies and central banks; and financial intermediaries, independent registered investment advisors, and hedge fund managers. Additionally, the company provides credit-related services, and global markets and institutional banking services; engages in business exits, and corporate treasury activities; and leases financing portfolios. The Bank of New York Mellon Corporation was founded in 1784 and is headquartered in New York, New York with additional offices across Asia, Europe and North America.
4) State Street Corp. (STT)
|Industry||Regional - Northeast Banks|
|Forward Price/Earnings Ratio||9.57|
|Price/Book Value Ratio||1.00|
State Street Corporation, a financial holding company, provides various financial products and services to institutional investors worldwide. The company's Investment Servicing business line provides products and services, including custody, product- and participant-level accounting; daily pricing and administration; master trust and master custody; record-keeping; foreign exchange, brokerage, and other trading services; securities finance; deposit and short-term investment facilities; loan and lease financing; investment manager and alternative investment manager operations outsourcing; and performance, risk, and compliance analytics.
This segment also offers shareholder services, which comprise mutual fund and collective investment fund shareholder accounting. Its Investment Management business line provides a range of investment management, investment research, and other related services, such as securities finance; and strategies for managing passive and active financial assets, such as enhanced indexing and hedge fund strategies for U.S. and global equities and fixed-income securities. The company serves mutual funds, collective investment funds and other investment pools, corporate and public retirement plans, insurance companies, foundations, endowments, and investment managers. State Street Corporation was founded in 1832 and is headquartered in Boston, Massachusetts.
5) Citigroup, Inc. (C)
|Industry||Money Center Banks|
|Forward Price/Earnings Ratio||6.63|
|Price/Book Value Ratio||0.48|
Citigroup, Inc., a diversified financial services holding company, provides a range of financial products and services to consumers, corporations, governments, and institutions worldwide. The company operates through two segments, Citicorp and Citi Holdings. The Citicorp segment operates as a global bank for businesses and consumers with two primary businesses, Global Consumer Banking and Institutional Clients Group. The Global Consumer Banking business provides retail banking and Citi-branded cards in North America; Asia; Latin America; and Europe, the Middle East, and Africa (EMEA). The Institutional Clients Group business provides securities and banking services comprising investment banking and advisory services, lending, debt and equity sales and trading, institutional brokerage, derivative services, and private banking; and transaction services consisting of treasury and trade solutions, and securities and fund services.
The Citi Holdings segment operates Brokerage and Asset Management, Local Consumer Lending, and Special Asset Pool businesses. The Brokerage and Asset Management business, through its Morgan Stanley Smith Barney joint venture, offers retail brokerage and asset management services. The Local Consumer Lending business provides residential mortgages, retail partner card loans, student loans, personal loans, commercial real estate, and other consumer loans and assets, as well as western European cards and retail banking services. The Special Asset Pool business consists of a portfolio of securities, loans, and other assets. The company has approximately 200 million customer accounts and operates in approximately 160 countries and jurisdictions. As of December 31, 2011, it had 1,016 retail bank branches in North America; 292 retail branches in EMEA; 2,221 retail branches in Latin America; and 671 retail branches in Asia. Citigroup, Inc. was founded in 1812 and is based in New York, New York.
6) Mizuho Financial Group, Inc. (MFG)
|Industry||Money Center Banks|
|Forward Price/Earnings Ratio||8.38|
|Price/Book Value Ratio||0.76|
Mizuho Financial Group, Inc., through its subsidiaries, provides various banking and financial services in Japan and internationally. The company offers retail banking services, including housing and personal loans, credit cards, deposits, investment products, and consulting services; and corporate banking services comprising loans, syndicated loan arrangements, structured finance, advisory services, other banking services, and capital markets financing services. It also provides derivatives and other risk hedging products; and securities services to individuals and corporate customers, as well as engages in proprietary trading, such as foreign exchange and bond trading, and asset and liability management.
In addition, the company offers securities services to corporations, financial institutions, public sector entities and individuals; trust and asset management services; and investment banking services comprising advisory services for financial and capital strategies, bond underwriting and structured finance, mergers and acquisitions, and financial advisory services. Further, it provides wealth management services; products and services related to trust, real estate, securitization and structured finance, pension and asset management, and stock transfers; non-banking services; information technology services, including system integration and outsourcing services, advisory services to financial institutions, as well as consulting services related to environmental issues. The company serves large corporations, financial institutions, public sector entities, foreign corporations, foreign governmental entities, individuals, small and medium enterprises, middle-market corporations, local governmental entities, and other public sector entities. As of March 31, 2012, it had 434 branches in Japan. Mizuho Financial Group, Inc. was founded in 2003 and is headquartered in Tokyo, Japan.
7) HSBC Holdings plc (HBC)
|Industry||Foreign Money Center Banks|
|Forward Price/Earnings Ratio||6.67|
|Price/Book Value Ratio||0.96|
HSBC Holdings PLC (HSBC Holdings) is a United Kingdom-based banking and financial services organization. Its international network comprises over 10,000 properties in 83 countries and territories in Europe; Hong Kong; rest of Asia-Pacific, including the Middle East and Africa; North America and Latin America. HSBC Holdings together with its subsidiaries (HSBC) provides a range of financial services to more than 128 million customers. HSBC manages its business through two customer Groups: Personal Financial Services and Commercial Banking, and two global businesses: Global Banking and Markets, and Private Banking. Personal Financial Services incorporates the Company's consumer finance businesses. The largest of these is HSBC Finance Corporation (HSBC Finance), a consumer finance company in the United States. On March 26, 2007, the Company acquired the remaining 50.01% of Erisa S.A. and Erisa I.A.R.D. (together re-named HSBC Assurances).
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on August 25, 2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.