Saturday, August 20, 2011

looks cheap to me

With all the seeming turmoil in the market, the Dow dove from about 12800 at the end of April to about 10700 this month. More severely it went from about 12700 in latter July to 10600 intraday in about two weeks. So roughly 15%.

Longer term, however, it's quite a way up from the 6500 reach in March 2009.

Still, based on P/E, stocks looks cheap to me. Especially financials and tech. For example, Berkshire Hathaway is now at 1.0 book, the lowest in 10 years of data. WFC has P/E of 8.6 with forward P/E of 6.7 and PEG of 0.7 (dividend 2.0%). C has P/E of 8.0 (Morningstar doesn't have a forward P/E now).

MSFT has a P/E of 8.9 with forward 7.6 and PEG 0.7 (dividend 2.6%). CSCO's P/E is 11.8 with forward P/E of 8.0 and PEG 0.9 (recently instated a dividend now yielding 1.6%). ORCL has P/E of 14.8 with forward P/E of 9.5 and PEG of 0.7 (dividend yield of 1.0%). HPQ after Friday's hit has a P/E of 5.8 with forward P/E of 5.5 and PEG of 0.6 (dividend 1.6%). INTC has P/E of 8.8 with forward P/E of 7.7 and PEG of 0.7 (dividend 4.2%).

AAPL has P/E of 14.1 with forward P/E of 11.4 and PEG of 0.6. GOOG has P/E of 17.6 with forward P/E of 12.0 and PEG of 0.6. EBAY has P/E of 20.5 with forward P/E of 12.1 and PEG of 1.0. STP has P/E of 3.7, but forward P/E of 5.9 and PEG of 0.3.

Retailers: WMT has P/E of 12.2 with forward P/E of 10.6 and PEG of 1.0 (dividend up to 2.8%). HD has P/E of 15.2 with forward P/E of 12.2 and PEG of 0.9 (dividend 3.1%). LOW has P/E of 13.4 with forward P/E of 10.4 and PEG of 0.7 (dividend 2.9%). BBY has P/E of 7.8 with forward P/E of 6.5 and PEG of 0.6 (dividend 2.7%). COST has P/E of 23.3 with forward P/E of 19.4 and PEG of 1.7 (dividend of 1.3%). TGT has P/E of 12.2 with forward P/E of 11.6 and PEG of 0.9 (dividend 2.4%). ROST has P/E of 14.2 with forward P/E of 11.7 and PEG of 0.8 (dividend 1.2%). ORLY has P/E of 19.0 with forward P/E of 14.9 and PEG of 0.9 (no dividend).

The defensive stocks don't look quite as cheap, but still quite reasonable sounding. JNJ has P/E of 15.1 with forward P/E of 11.9 and PEG of 2.1 (dividend yield of 3.6%). PG has P/E of 15.5 with forward P/E of 13.2 and PEG of 1.5 (dividend yield of 3.5%). MMM has P/E of 13.1 with forward P/E of 11.0 and PEG of 0.8 (dividend 2.8%). GE has P/E of 11.5 with forward P/E of 9.1 and PEG of 0.8. (dividend 3.9%).

That's all historically cheap looking at the past ten years of Morningstar data (and reading Phil Town's book where multiples were much higher).

Well, here's a couple of high ones: AMZN has P/E of 78.7 with forward P/E of 55.2 and PEG of 2.1. RHT has P/E of 54.3 with forward P/E of 27.5 and PEG of 1.3 (surprisingly low).

By all rights, I should be selling AMZN (actually I had been), but it would be like selling gold (or GLD) these days.

So with the market so up from 2-1/2 years ago, it's somewhat amazing to me to see all these low multiples. Though it's hard to be optimistic these days, the numbers are enticing and I have to trust that the multiples can turn up from here (or within a reasonable time frame). In which case, I'd be doing pretty well. If not, well it's only money.

Or maybe I should sell on rallies and ramp up on dividend stocks.

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Then again, maybe it's not THAT cheap.

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[9/29/11 via dnalur] Greenblatt says stocks look cheap.

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