Stocks Appear Fundamentally Cheap: 10 Companies To Look At

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Includes: BRK.B, GE, INTC, JPM, KO, MRK, PG, UNH, WMT, XOM
by: David Ristau

Stock prices have gone all over the place over the past four years. Market uncertainties are now at an almost unbearable level, but are these concerns concrete? Many companies today have seen their stock prices plummet over these past four years and it seems as though they cannot rally back to highs set back in 2007. We have researched 10 of the largest companies in the world from 10 of the largest industries to see just how their stocks are valued and if there is a chance for their prices to rally back to levels seen just four years earlier. Companies include: Merck (NYSE:MRK), JP Morgan (NYSE:JPM), Wal-Mart (NYSE:WMT), Exxon Mobil (NYSE:XOM), Procter & Gamble (NYSE:PG), UnitedHealth Group (NYSE:UNH), GE (NYSE:GE), Coca-Cola (NYSE:KO), Intel (NASDAQ:INTC), and Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B).

What we really want to get out is whether or not companies are fundamentally better off than they were in 2007, and if so, are share prices really severely undervalued in the market.

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*Adjusted for Stock Split

The only stocks that have seen increases in price since 2007 are Wal-Mart (WMT) and Coca-Cola (KO). These two companies have prevailed through various patchy times in the economy, from the lows of 2008 and 2009, and have been able to hold steady price increases for over a decade.

This anomaly can be attributed to strong year over year revenues for each company, coupled with increases in revenue, net income and operating income since 2007. These strong fundamentals have allowed both companies to maintain a strong holding position in many successful long-term portfolios.

The rest of the companies profiled here have seen decreases in price since 2007 – a measure attributed to the dismal market conditions of 2008 and 2009.

Although these companies have seen decreases in prices that does not mean there is no incentive to buy. JPM, UNH and INTC have seen similar increases in revenues, net income and operating income as WMT and KO.

The most surprising price change is in PG, which seems to be severely undervalued at 62.90, a 17% decrease since 2007, while still holding positive year-over-year revenues and similar operating and net incomes to 2007. If the company can continually hold steady revenue and income streams then it should be primed for an increase over the next couple of months. PG operates with a P/E ratio of 16, which is pretty fairly valued.

With all the fear out there in the market, it's nice to know that companies are doing better than they were in 2007, and that, in reality, our market is actually sitting fairly cheap right now.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.