It is nearly impossible to point to a single great example of undervalued stocks during this ever-lingering national recession. Most investors are confident of a healthy rebound, eventually, and the savviest are carefully scanning earnings reports and projections like sports fans read box scores. However, can a Low Price to Book be as indicative as a low batting average is for a baseball manager? Investing is challenging enough, let alone in a hostile and unpredictable recessionary environment.
In recent months Wall Street experts and market watchers have offered glimpses of some favored undervalued stocks, and reasons offered varied greatly. For example, one expert cited General Mills’ relatively Low P/E ratio of 15, noting it’s a bargain compared with the company’s food-products peers. This expert outlined a list of five top undervalued stocks. Four were food or household products, mostly companies with stable earning histories – a typical quality for undervalued stocks.
Other experts did not shy away from a market segment that could prove more volatile long-term: technology. Microsoft, Intel and IBM were stocks cited in one report as undervalued. It may be difficult for a layperson to fathom tech giants being “undervalued,” but one must look only at share prices and profit potential to understand. Judging on EBITDA multiples alone, Microsoft is off the charts. The company has recorded 62 consecutive quarters of positive EBITDA, reaching a 16-year high in the most recent quarter.
Yet, no single company rises as a standout example of undervalued stocks. Most seasoned investors believe they can separate winners and losers when they take good close looks at indicators such as a Price/Cash Flow, or if they are knowledgeable of P/E ratios for most major players the past decade or so. Perhaps there are other statistical categories or historical references to steer them toward calmer waters. The bottom line is, there are too many excellent undervalued stocks to list on one page today; and that list could change from day to day.
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