These are big stocks now trading at or below book value with low price/earnings ratios and which are paying dividends. That’s a sweet combination if you’re a value person.
If you’ve read and studied The Intelligent Investor by Benjamin Graham, you’re familiar with the basics of identifying the “undervalued.” These are stocks that don’t get a lot of attention on the business channels or in the business newspapers. It’s much more exciting and you get more viewers and readers when you write about Tesla
These are value stocks in the traditional sense:
The Bank of New York Mellon
It looked great coming off of the March, 2020 pandemic lows and rallied right up until February of this year before selling off significantly. As a matter of fact, the price has travelled more than half-way back to that dramatic early 2020 bottom.
At this level, Bank of New York Mellon can be purchased for just 94% of its book value and with a price-earnings ratio of just 10.59. With the p/e of the S&P 500 now at 20, the big bank is looking even more like a value stock.
They’re paying a 3.18% dividend. Earnings per share are 8.30% this year and the past 5-year EPS growth rate is 5.70%. Nothing to write home about but this is a big bank stock and they are positive.
It started off the 2020 at about 35 and now trades in 2022 at about 31 but there’s been quite a bit of action in between. If you connect the low of September, 2020 at 17 with the low of September, 2021 at 24, you get a definite uptrend line.
HSBC is trading today at just 63% of its book value making it one of those big bank stocks that nobody really wants to have in their portfolio. The price-earnings ratio is very value stock-ish at 10.83.
In the meantime, coming perhaps without too much notice, the bank’s earnings this year are up by 222.50% and the record for the past 5 years is a positive 56.80%. HSBC pays a 3.56% dividend.
Webster shows a powerful up move off of the March, 2020 lows that just keeps going right up until early this year. After that big buying volume bar in late January, the stock began falling back and here it is at 45.06 now.
You can buy as many shares as you want (probably) at this price which represents just 84% of the bank’s book value. Webster’s price-earnings ratio of 14.48 is relatively low when compared to almost any list of, just for example, hot NASDAQ
Investors receive a dividend yield of 3.55%.
These are not perfect situations, of course, but if value investing along the lines of Benjamin Graham and Warren Buffett sounds appealing, Bank of New York Mellon, HSBC and Webster might be worth researching.
Not investment advice. For educational purposes only.
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