Value Alert: 3 Well Known Companies To Buy
Brian is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Finding a way to outperform the general market averages is never easy. Obviously, bonds, savings account, and/or certificates of deposits don’t look like a nice option when we see they give a negative real rate of return. Commodities continue to be excessively volatile as well. However, investing in these three technology-oriented companies below should provide returns that outperform the market in the long-run.
Is Intel (NASDAQ: INTC) a buy?
Semiconductor giant Intel has essentially a monopoly in the personal computing semiconductor market. The big problem though is that industry looks fully mature and already showing sign of having little to even negative growth as smart phones continue their impressive growth rates. Nonetheless, has the market pushed Intel’s price low enough for us to purchase?
I believe Intel is a buy for these following reasons. First and foremost, the company has exceeded consensus estimates in each of the past four quarters which is no easy feat. Secondly, analysts are still calling for a very respectable 12.5% per annum growth rate over the next five years. Thirdly, the company is trading at a relatively cheap 10x trailing and forward P/E and 4.5x enterprise value to EBITDA. Lastly, and most importantly to me, the company yields a very nice and consistently growing 4.2% dividend. I think the stock will serve investors well.
Should we call on Cisco Systems (NASDAQ: CSCO) to lead us to gains?
Networking and internet infrastructure giant Cisco Systems has its tentacles everywhere as a world-wide corporation. The company is a giant with a market capitalization at approximately $115 billion, but is there still room for the stock to move higher?
I believe Cisco should move higher due to a number of factors. Like Intel, the company has exceeded consensus estimates in each of the past four quarters. Secondly, the company is trading at a relatively cheap 12x trailing and 10x forward P/E and 6.5x enterprise value to EBITDA. Thirdly, the company has a very large $30 billion net cash position. Lastly, and most importantly to me, the company yields a very nice and consistently growing 2.6% dividend.
Is it finally time to take a bit of the Apple (NASDAQ: AAPL)?
As the one-time most valuable company in history, Apple Inc. is surely a company you’ve heard before. You most likely have also heard of its precipitous and massive 40% decline in just over five months pushing it from its $705 all-time high to current share price at approximately $430. However, has it become a great value stock at these levels?
I believe Apple is in fact the best buy of the three stocks listed in this article. First and foremost, the company according to its most recent earnings report has an incredible net cash position at approximately $135 billion. At its current valuation, that means the company is essentially one-third cash with no debt! Secondly, the company is trading at a relatively very cheap 10x trailing and 8.5x forward P/E, along with just a .5x price to expected growth rate. Thirdly, the company still has an amazing 25%+ profit margin and returns on equity exceeding 38%. Lastly, the company has a consistently growing 2.5% dividend yield.
The Foolish Conclusion:
As intelligent “Fools” we are always on the hunt for companies that offer great value. I believe these three companies listed above do offer that while also paying us a nice dividend as the companies continue to thrive.
Brian Gorban owns shares of Apple and Apple. The Motley Fool recommends Apple, Cisco Systems, and Intel. The Motley Fool owns shares of Apple and Intel. 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!