5 Value Stocks That Will Make Your Portfolio Resilient

by: Stock Croc

In this article, I will analyze three NASDAQ 100 stocks in the rebounding technology sector, one NASDAQ 100 stock in the stagnant services sector and one orphan in the distressed financial sector. As a value investor, I chose these five stocks because they all show resiliency. Whether from financial strength, positive earnings growth, or optimal strategic positioning, I believe they all represent good value for investors. I'll be centering my analysis on the fundamentals (price/earnings, price to book, debt/equity etc.) and looking at any upside or downside catalysts. I'll also make comparisons with a close competitor for additional perspective.

eBay Inc. (NASDAQ:EBAY) is a large-cap with about $42 billion in market capitalization. eBay stock is trading at around $33. Rival Amazon.com, Inc. (NASDAQ:AMZN) trades at roughly $184 with market capitalization of $84 billion. Both companies are in the services sector, are NASDAQ 100 members, and in the catalog and mail order house industry, ensuring the fairest possible comparison. There isn't much out there in terms of upside or downside catalysts, but how should we interpret Amazon's soon to open brick & mortar store? I'm all for thinking 'outside' the box, but thinking about being 'in' the box is counterintuitive to me. As the table below shows, these companies have significantly diverse fundamentals. Amazon's price/earnings ratio is 10 times that of eBay, making it an extremely costly stock. I won't bore you with a line by line dissertation, because the numbers tell the story. eBay is a better value, with more growth opportunities and superior financial strength and soundness.

Trailing P/E 13.36 133.68
PEG Ratio (5 yr expected) 1.15 E 4.89
Price/Book (mrq) 2.36 10.74
Return on equity [TTM] 19.43 R 8.63
Qtrly Revenue Growth (yoy): 35.50 34.60
Qtrly Earnings Growth (yoy): 254.00 S -57.50
Total Debt/Equity (mrq): 11.66 23.33
Current Ratio (mrq): 1.88 U 1.17
Trailing Annual Dividend Yield N/A N/A
Payout Ratio N/A S N/A
Winner X
Large cap Dell Inc. (DELL), also a NASDAQ 100 member, trades at about $18 with a market capitalization of around $32 billion. I am matching against another technology large cap in the computer industry, International Business Machines (NYSE:IBM). IBM, which trades at about $194, with market capitalization of around $224 billion. IBM's business is diversified computers systems and Dell's is largely personal computers. Dell share price has been on the rise since it reached a new 52 week high on May 11, 2011. February 21st, 2012 Dell will be releasing 4th quarter results, which, if positive, will nudge the stock a bit higher still. I consider Dell's recent launch of a new software group to be a positive catalyst. With personal computer sales slowing, this move could create savings and possibly new revenue streams. As for 'Big Blue', Buffet bought it; 'nuf' said. For now, I would recommend a hold on both stocks. The PC market is soft as demonstrated by the quarterly year-over-year revenue growth numbers.
Trailing P/E 9.18 14.80
PEG Ratio (5 yr expected) 1.63 E 1.22
Price/Book (mrq) 3.69 11.09
Return on equity 47.23 R 73.05
Qtrly Revenue Growth (yoy): -0.20 1.60
Qtrly Earnings Growth (yoy): 8.60 S 4.40
Total Debt/Equity (mrq): 95.42 154.78
Current Ratio (mrq): 1.40 U 1.21
Trailing Annual Dividend Yield N/A 1.20
Payout Ratio N/A S 22.00
Winner [TIE] X X
Yahoo Inc. (YHOO) is a NASDAQ 100 stock in the technology sector. It is trading at about $16, and Yahoo has a market capitalization of around $20 billion. The table below contrasts Yahoo with AOL Inc. (NYSE:AOL), also an Internet information provider. AOL is trading at about $18 and has a market cap of $2 billion. As the table shows, AOL is the weaker of the 2 companies. That said, Yahoo is in total disarray over the
situation with Alibaba Group Holding Ltd (1688.HK). As a practical matter, no matter how this ultimately ends, Yahoo will be a winner. They will be enriched from selling their Alibaba stake, or shareholders will see a dramatic increase in value if a takeover develops.

Trailing P/E 19.30 29.67
PEG Ratio (5 yr expected) 1.68 E 1.97
Price/Book (mrq) 1.57 0.77
Return on equity 8.44 R 0.59
Qtrly Revenue Growth (yoy): -13.20 -6.00
Qtrly Earnings Growth (yoy): -5.30 S -65.60
Total Debt/Equity (mrq): 1.07 5.10
Current Ratio (mrq): 2.86 U 1.57
Trailing Annual Dividend Yield N/A N/A
Payout Ratio N/A S N/A
Winner X
Huntington Bancshares Incorporated (NASDAQ:HBAN) has a market cap of around $5 billion and is trading at about $6 per share. It is defined as a Midwest regional bank in the financial sector. I'm squaring Huntington off against KeyCorp (NYSE:KEY), and although it is defined as a money center bank, it is the nearest in market cap at around $8 billion. Key trades at about $8 per share. There are no significant up or downside catalysts to report. As the table below demonstrates, the match-up is largely even, but Huntington reports superior earnings growth and posts a slightly better dividend yield.

Trailing P/E 10.05 9.24
PEG Ratio (5 yr expected) 1.91 E 1.20
Price/Book (mrq) 1.02 0.80
Return on equity 10.44 R 9.17
Qtrly Revenue Growth (yoy): -1.00 -20.70
Qtrly Earnings Growth (yoy): 3.20 S -37.50
Total Debt/Equity (mrq): N/A N/A
Current Ratio (mrq): N/A U N/A
Trailing Annual Dividend Yield 1.70 1.20
Payout Ratio 17.00 S 11.00
Winner X
Seagate Technology (NASDAQ:STX) is our final NASDAQ 100 stock. It trades at about $26 per share and has a market cap of around $12 billion. We have a good match-up here against
Western Digital Corporation (NYSE:WDC), trading at about $39. Western has market capitalization of $9 billion. Both firms are in the technology sector, manufacturing and marketing data storage devices. Seagate's 2nd quarter earnings exceeded analyst expectations lifting share price. Western Digital is lagging as a result of the recent flooding in Thailand. Western's operations were more severely impacted than those of rival Seagate. The consequence is customers are offering Seagate long-term contracts because Western is perceived as being a less reliable source for product. On the strength of the fundamentals, Seagate is a buy for me.
Trailing P/E 12.88 13.36
PEG Ratio (5 yr expected) 0.18 E 0.59
Price/Book (mrq) 3.58 1.54
Return on equity 29.32 R 12.42
Qtrly Revenue Growth (yoy): 17.50 -19.40
Qtrly Earnings Growth (yoy): 275.30 S -35.60
Total Debt/Equity (mrq): 84.42 3.90
Current Ratio (mrq): 2.28 U 3.48
Trailing Annual Dividend Yield 2.00 N/A
Payout Ratio 26.00 S N/A
Winner X

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