Four Undervalued Stocks the Institutions are Buying
Ash is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Calling all value investors! I think I have found four stocks that you might be interested in taking a look at. These five stocks all carry a PDG value below 1, they are profitable, and the institutions are buying them up.
If you’ve been following the markets at all lately then you’d have to know I was going to get this thing started with American International Group (NYSE: AIG). AIG is involved in the property and casualty insurance business. They conduct most of their business within the United States and are currently valued at around $52 billion.
The company has a price-to-book ratio of 0.51, a price-to-sales ratio of 0.73 and a PEG ratio of 0.43. These are the types of numbers that value investors look for before they begin to delve deeper into the books.
AIG is profitable on revenues of $70 billion and it gives investors a great 27.38% return on equity over the trailing twelve months.
In the current quarter, institutions have added some 498 million shares to their books -- that’s over 40% of AIG’s float.
Abercrombie & Fitch
Abercrombie & Fitch (NYSE: ANF) has had a pretty solid quarter on the stock market, providing returns north of 20%. The company makes its money as a specialty retailer selling casual apparel to men, women and children through a variety of retail stores.
Abercrombie & Fitch offers a price-to-sales ratio of 0.87, a forward P/E of 13.79 and a PEG ratio of 0.97. The company has a return on assets value of 5.94% as well as a 6.10% return on equity.
Citadel Advisors LLC added 5,000,000 shares of the company to their books in this quarter, bringing their total holdings to 5,216,842 shares, which is a 6.3% stake in the company.
Here’s an odd one for you, VocalTec (NASDAQ: CALL). This company provide a variety of voice-over-IP solutions for communication service providers. You will have seen the commercial on TV for their MagicJack device for consumer use.
The company is small, it is profitable, it carries a 0.51 PEG ratio, and gives investors a 12.19% return on assets. The company has $36 million in cash and $3.9 million in debt, there doesn’t seem to be much trouble there.
There were 1.1 million shares of this company acquired in the current quarter by institutional investors, even despite its relatively small size.
Outlook on this stock isn’t too good in The Motley Fool’s CAPS section. Are people missing something or are the institutions wrong?
Calumet Specialty Products Partners
Hydrocarbon, that’s a funny thing to be investing in, right? Not if you’re the institutions that were busy buying Calumet Specialty Products Partners (NASDAQ: CLMT). Calumet produces a variety of hydrocarbon products for use in North America.
This company gives out an incredible 8% dividend, has a low PE ratio, comes with a 0.61 PEG ratio, and 51% yoy revenue growth.
Institutions added 2.6 million shares of this company to their books, representing 6.87% of the company’s float. Morgan Stanley now owns 5.21% of this company and Citigroup holds 3.56%.
The company also had some big news, recently announcing that they would be buying a San Antonio refinery for $115 million.
This one’s a bonus -- it doesn’t offer great value but it might offer some big growth and institutions have been on the acquisition spree lately. The company is Facebook (NASDAQ: FB).
By now you probably know that Facebook is the largest social networking website on the internet. It offers free membership to individuals and businesses allowing them to share information, photos, videos and more.
Institutions adding to their positions include Tiger Global who increased their holdings by 9 million shares to bring holdings up to 11 million.
Ash1402 has no positions in the stocks mentioned above. The Motley Fool owns shares of American International Group and Facebook and has the following options: long JAN 2014 $25.00 calls on American International Group and long JAN 2014 $20.00 calls on Facebook. Motley Fool newsletter services recommend American International Group and Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!