Do you prefer the largest cap stocks? Looking for undervalued stocks? Do you prefer companies with strong profits? For ideas on where to look, we ran a screen you might find interesting.
The Price/Earnings ratio is one of the most commonly used price-multiple metrics. Often, EPS from the last four quarters is used to derive this number. A firm that has a high P/E ratio generally indicates that investors have high expectations of the firm relative to future earnings growth. By the opposite token, investors generally have lower expectations of a firm with a low P/E ratio. A firm that holds a P/E below 10 could be viewed as having "value investment" potential. One thing to remember is that EPS is an accounting measure that could be potentially manipulated. Thus the P/E is only as good as the quality of the earnings.
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
We first looked for Large Cap stocks that are trading at a discount (P/E<10) and that have achieved strong bottom line profitability (Net Margin [TTM]>10%). We did not screen out any sectors.
Do you think these large-cap stocks will trade at a higher valuation? Use our list along with your own analysis.
1) Citigroup, Inc. (NYSE:C)
|Industry:||Money Center Banks|
Citigroup, Inc. has a Price/Earnings Ratio of 9.44 and Net Margin of 14.27%. The short interest was 1.27% as of 04/22/2012. 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.
2) Entergy Corporation (NYSE:ETR)
Entergy Corporation has a Price/Earnings Ratio of 8.74 and Net Margin of 12.18%. The short interest was 1.50% as of 04/22/2012. Entergy Corporation, together with its subsidiaries, engages in the electric power production and retail electric distribution operations in the United States. The company operates in two segments, Utility and Entergy Wholesale Commodities. The Utility segment engages in the generation, transmission, distribution, and sale of electric power in portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans.
3) Capital One Financial Corp. (NYSE:COF)
Capital One Financial Corp. has a Price/Earnings Ratio of 7.01 and Net Margin of 21.75%. The short interest was 1.86% as of 04/22/2012. Capital One Financial Corporation operates as the bank holding company for the Capital One Bank (NYSE: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) CF Industries Holdings, Inc. (NYSE:CF)
CF Industries Holdings, Inc. has a Price/Earnings Ratio of 8.46 and Net Margin of 28.19%. The short interest was 3.29% as of 04/22/2012. CF Industries Holdings, Inc., through its subsidiary, CF Industries, Inc., manufactures and distributes nitrogen and phosphate fertilizer products, serving agricultural and industrial customers worldwide. It operates in two segments, Nitrogen and Phosphate.
5) Ford Motor Co. (NYSE:F)
|Industry:||Auto Manufacturers - Major|
Ford Motor Co. has a Price/Earnings Ratio of 2.28 and Net Margin of 14.84%. The short interest was 3.85% as of 04/22/2012. Ford Motor Company engages in the development, manufacture, distribution, and service of vehicles and related parts worldwide. The company operates through two sectors, Automotive and Financial Services. The automotive sector offers vehicles primarily under the Ford and Lincoln brand names. This sector markets cars, trucks, and parts through retail dealers in North America, and through distributors and dealers outside North America.
*Company profiles were sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.