The goal in value investing is to buy a stock when it trades at a significant discount to fair value in order to hold it until the price finally catches up to the intrinsic worth of the underlying business. Here are two investment ideas that have surfaced in the tech sector that could make great value investments.
Apple (NASDAQ: AAPL )
It's no secret that Apple is a cheap stock. But a discounted cash flow valuation helps add a bit of perspective on exactly how cheap Apple really is.
In a discounted cash flow valuation, you simply discount future cash flows by the required rate of return that would convince you to invest in stocks to find the present value of these cash flows. I've used a discount rate of 10%, which is typical. Next, I estimated that Apple's annual free cash flow will stay at today's levels. To be conservative, I didn't add any asset value, like excess cash, to intrinsic value.
The result? Apple's shares are worth $468 per share. In other words, at $417 the stock trades 11% below its fair value.
Top 10 Asian Stocks To Buy For 2015: Ford Motor Credit Company(F)
Ford Motor Company primarily develops, manufactures, distributes, and services vehicles and parts worldwide. It operates in 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 of North America. It also sells cars and trucks to dealers for sale to fleet customers, including daily rental car companies, commercial fleet customers, leasing companies, and governments. In addition, this sector provides retail customers with a range of after-sale vehicle services and products in the areas, such as maintenance and light repair, heavy repair, collision repair, vehicle accessories, and extended service contracts under the Ford Service, Lincoln Service, Ford Custom Accessories, Ford Extended Service Plan, and Motorcraft brand names. The Financial Services sector offers vari ous automotive financing products to and through automotive dealers. It offers retail financing, which includes retail installment contracts for new and used vehicles; direct financing leases; wholesale financing products that comprise loans to dealers to finance the purchase of vehicle inventory; loans to dealers to finance working capital, purchase real estate dealership, and/or make improvements to dealership facilities; and other financing products, as well as provides insurance services. Ford Motor Company was founded in 1903 and is based in Dearborn, Michigan.
Advisors' Opinion:- [By Daniel Miller]
Ford (NYSE: F ) and General Motors (NYSE: GM ) have both come a long way since the depths of the recession. Each company took a very different route, but both are now better managed and more profitable. GM has much larger revenues and sells more vehicles globally, yet even with that top-line advantage it lags behind its rival Ford in bottom-line profits. That's because Ford cut costs and improved operating efficiency to bring more dollars of each sale to the bottom line ��and it's worked tremendously. That's a large reason for Ford's recent stock rally that saw its 52-week low of $8.82 rocket up to around $15 ��but there's more to be excited about.
- [By John Rosevear]
Diesel cars are common in Europe, but still unusual here
Nearly everybody offers a big range of diesel car engines in Europe, where taxes on gasoline are high and diesel is a widely accepted alternative. Ford's (NYSE: F ) "Econetic" diesel Focus, which is said�to have CO2 output comparable to a hybrid, is just one of a range of diesel cars offered by the Blue Oval in Europe ��but not sold here.
Best Cheap Companies To Buy Right Now: Emerson Electric Company(EMR)
Emerson Electric Co. operates as a diversified manufacturing and technology company. The company engages in appliance solutions, climate technologies, industrial automation, motor technology, network power, process management, professional tools, and storage solutions businesses. Its appliance solutions business provides appliance controls, appliance motors, heating products, and white-rodgers; climate technology business provides heating, ventilation, air conditioning, and refrigeration (HVACR) solutions for residential, industrial, and commercial applications; and industrial automation business offers bearings and power transmission products, electrical power generation products, electric motors, variable speed drives and servos, electrical products, material joining solutions, fluid automation products, and wind turbine systems. The company?s motor technology business provides appliance motors, HVACR motors, DC motors, fractional horsepower motors, integral horsepower a nd larger motors, and drives; network power business provides power, precision cooling, connectivity, and embedded solutions; and process management business provides various wireless related products from self-organizing field networks to wireless asset and people tracking. Its professional tools business offers pipe working and threading equipment, pressing technology, utility locating and visual diagnostics systems, drain maintenance tools, power tools, air tools, general purpose hand tools, wet/dry vacs, job site storage equipment, truck tool boxes and equipment, and van storage equipment; and storage solutions business provides shelving and storage products for residential, commercial, and foodservice needs, as well as offers specialized carts, mobile computer workstations, and cabinet fixtures. The company was founded in 1890 and is headquartered in St. Louis, Missouri.
Advisors' Opinion:- [By Ben Levisohn]
That negative sentiment “flashed as a positive indicator,” Inch and Lau say, and some stocks appear to be “‘locked and loaded’ to meaningfully exceed forecast estimates.” Those include Rockwell Automation (ROK), Eaton (ETN) and Emerson Electric (EMR).
- [By Dividends4Life]
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- More Stock Analysis - [By Chuck Carnevale]
Actually, there are several companies on these lists that qualified for either or both of my favorites lists. For example, Aflac (AFL) and or Emerson Electric (EMR) could easily be on both lists. My point is that I feel the reader should give the same consideration to each of these names as they would the two top 10 lists. To be clear, selecting the top 10 was difficult and therefore to a great extent subjective on my part. My method was to simply run a F.A.S.T. Graphs��on each Dividend Champion with above-average total return calculations. Then my lists were created by picking and choosing those companies that from my review looked best based on value, earnings and safety.
- [By Dan Caplinger]
Next Tuesday, Emerson Electric (NYSE: EMR ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.
Best Cheap Companies To Buy Right Now: Wendy's/Arby's Group Inc.(WEN)
The Wendy's Company operates as a quick-service hamburger company in the United States. The company, through its subsidiary, Wendy's International, Inc., operates as a franchisor of the Wendy's restaurant system. As of December 26, 2011, the Wendy's system comprised approximately 6,500 franchise and company restaurants in the United States and the United States territories, as well as in 26 other countries worldwide. The company was formerly known as Wendy's/Arby's Group, Inc. and changed its name to The Wendy's Company in July 2011. The Wendy's Company was founded in 1884 and is headquartered in Dublin, Ohio.
Advisors' Opinion:- [By Ben Levisohn]
Upgrades had a big impact on stocks today. Wendy’s (WEN), for instance, gained 4.5% to $8.62 after being upgraded to Buy at Argus, while Cash America (CSH) advanced 3.7% to $44.32 after being upgraded to Market Outperform from Market Perform at JMP Securities. Walgreen (WAG) proved the big winner in the S&P 500 after�Goldman Sachs called the stock a Conviction Buy.
- [By Brian Pacampara]
What: Shares of Wendy's� (NASDAQ: WEN ) climbed 10% today after the fast-food restaurant operator posted strong quarterly results and announced a plan to sell about 425 restaurants by mid-2014.�
Best Cheap Companies To Buy Right Now: Bank of America Corporation(BAC)
Bank of America Corporation, a financial holding company, provides banking and nonbanking financial services and products to individuals, small- and middle-market businesses, large corporations, and governments in the United States and internationally. The company?s Deposits segment generates savings accounts, money market savings accounts, certificate of deposits, and checking accounts; and Global Card Services segment provides the U.S. consumer and business card, consumer lending, international card and debit card services. Its Home Loans & Insurance segment offers consumer real estate products and services, including mortgage loans, reverse mortgages, home equity lines of credit, and home equity loans. It also provides property, disability, and credit insurance. The company?s Global Commercial Banking segment offers lending products, including commercial loans and commitment facilities, real estate lending, leasing, trade finance, short-term credit, asset-based lending, and indirect consumer loans; and capital management and treasury solutions, such as treasury management, foreign exchange, and short-term investing options. Its Global Banking & Markets segment provides financial products, advisory services, settlement, and custody services; debt and equity underwriting and distribution, merger-related advisory services, and risk management products; and integrated working capital management and treasury solutions. The company?s Global Wealth & Investment Management segment offers investment and brokerage services, estate management, financial planning services, fiduciary management, credit and banking expertise, and asset management products. Bank of America Corporation serves customers through a network of approximately 5,900 banking centers and 18,000 automated teller machines. It was formerly known as NationsBank Corporation and changed its name on October 1, 1998. Bank of America Corporation was founded in 1874 and is based in Charlott e, North Carolina.
Advisors' Opinion:- [By Dan Caplinger]
Leading the way down for the Dow was UnitedHealth, which fell almost 4% after its earnings report included an example of what could become a troubling trend, as a major customer chose to convert from a full-risk insurance plan to a self-insurance fee-based model. But elsewhere in the Dow, Bank of America (NYSE: BAC ) fell another 2%, adding to losses that have taken the stock down nearly 10% in the past month. Following its earnings report, B of A faces a big challenge: how to move past the capital-restoration stage of its recovery and find ways to foster new growth opportunities. With most of the easy work already having been done, B of A will face competitive pressure and difficult environmental conditions in trying to navigate its way to a stronger turnaround.
- [By Quoth the Raven]
Not letting your fundamentals get out of line is something that I'm a big supporter of. Cost cutting is something that's recently made Bank of America (BAC) a bullish call for me as well. It's important, no matter how big your company is, to have a firm grasp on every dollar that leaves the company bank account. Fundamentals are always number one, and P&G showing it's aware of that continues to make it an attractive investment.
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