5 Stocks On Sale

This article originally appeared on The Div-Net July 11, 2011.

With the drop in the market being the talk of the town, it’s not terribly difficult to find value. I could probably put a list of 30 or more stocks that I find particular value in, but I think ultimately you want to stick to your plan. You should always think about allocation, diversification and buying quality on sale.

Here’s a diversified list of quality equities on sale:

Aflac Incorporated (AFL)

Aflac is down over 10% today. It’s trading at a 9.33 P/E ratio. I think this stock is of particular value, as I thought it was already attractively valued in the mid-$40′s. It has a yield of 3.37% at today’s prices, which is unusually high for this company.


Intel Corporation (INTC)

Intel is a tech titan trading at a very attractive valuation. It is also trading in a single digit P/E ratio of 9.13. It has an entry yield 4.21% based on today’s price. This stock is trading below my cost basis, and am strongly considering adding to my holdings.

Chevron Corporation (CVX)

Energy has been getting hammered lately, right along with insurance. Oil has fallen dramatically lately, and that puts a lot of energy stocks on sale. Chevron is trading for a P/E ratio of only 7.91 with a yield of 3.44%. Great long-term holding here.

Abbott Laboratories (ABT)

Health care hasn’t been immune to the downturn and ABT is trading at very attractive values right now. The P/E ratio is a lowly 14.28 and the yield is currently at 4.09%. I really like the long-term prospects of Abbott and it’s one of the stronger companies available in its space.

PepsiCo, Inc. (PEP)

Pepsi may not be the fabulous deal that other stocks on this list are, but it’s a wonderful company that is extremely dominant in the snack food category. It’s trading at a P/E ratio of 15.36 and has an entry yield of 3.42%, which is very attractive for this stock.

There are a number of attractively priced equities out there, and I think this is a phenomenal time to deploy capital, if you have it. We may see further drops in the market, but that would just be an even better time to buy than it already is. I enjoy getting paid dividends in the mean time.

Thanks for reading.

Comments

  1. says

    Great companies!

    I bought Medtronic today and Wal Mart. Im watching Intel, Aflac and Pepsi right now. They are cheep but it can be cheeper. Thats good news! Mr market are fantastic sometimes!

    Keep up the good work!

    Regards from Sweden.

  2. says

    All the big pharma companies have faded into the background with the recent downturn. They are actually very good buys at the current level.

    Thumbs up for ABT!

  3. says

    ägamintid,

    I think MDT is a great pick up and WMT isn’t going anywhere.

    I think PEP and INTC could go lower, but I’m not sure how much lower AFL will go. I think AFL is of particular value and am considering initiating a position in it. The ONLY thing keeping me away is the uncertainty regarding payouts due to the Japan disaster.

    Good luck on your purchases!!

    Thanks for stopping by.

  4. says

    MoneyCone,

    I agree. Big thumbs up for ABT. It’s been a phenomenal buy for a while now…which is why it’s one of my larger holdings.

    I love this market right now. I’m hoping it continues to fall until I can amass a small fund of capital!

    Take care. :)

  5. says

    I bought AFL when it was around $45, it’s trading in the mid 30s now. There’s nothing wrong with the company so I’ll probably buy more when cash becomes available. Good list DM! But can you explain your reason behind intel? They have no exposure to the mobile industry.

  6. Scott says

    Good list.

    Looking at this list strictly from a dividend growth perspective, I think INTC is the one that shows the highest consistent dividend growth track record. According to the Dividend Stock Discovery Tool at dividend-stocks.com (I cannot vouch for their accuracy), INTC shows the following Annual Dividend Growth over the past few time periods:

    1 Year: 12.9%
    3 Year: 12.1%
    5 Year: 14.9%

    Those look to me like really good annual dividend growth rates, if they can keep it up. One thing I would look into is how Intel might be affected by HP’s reported plan to sell off its PC manufacturing business. I don’t know if HP buys Intel chips or if that makes any difference, but it does make me wonder.

  7. says

    Henry,

    I think now would be a terrific time to average down and lower your cost basis on AFL.

    On INTC it’s a value/dividend growth play. I don’t think they are going to have the high growth they had in the past, but I think their R&D spending puts them at an advantage and I think it’s a strong firm. They dominate the PC landscape, which isn’t going to disappear overnight. I think they will eventually gain contracts and move into the mobile market.

    That all being said, I would never make it a large holding as I dislike tech in general as a sector. That’s due to the cyclical nature of it and my general misunderstanding of certain systems and components.

    Thanks for stopping by!

  8. says

    Scott,

    The news coming out of HP is pretty surprising to me, but this just goes to show you how fast the tech scene can change and why I would never be concentrated in this sector.

    HP is a huge player in the PC market, but if they did divest this business another firm would likely make up the difference, imo. Hard to say and my understanding on tech is lacking. I think HPQ’s free fall today shows how investors feel about this surprising move.

    We’ll see how it goes!

    Take care.

  9. says

    I recently purchased shares in PEP and I am pleased with my position. The share price has taken a hit in recent weeks, and good entry points were available in my opinion.

    I like Intel, as well as the yield. Great job presenting the details. So far, my only real technology plays in my portfolio are MSFT and GOOG, but Intel is one I’m watching.

    Although XOM is my main US large cap Oil & Gas play, I’ve been eying Chevron a bit lately. When it comes time to top up on in the sector, this may be a destination, especially if the Canadian dollar can hang tough! :)

    Nice post!

  10. says

    TWC,

    Great move with PEP. I think it’s a pretty solid buy at, or below, $64/share. Great company with quite a few $1 billion brands.

    Intel seems solid. No debt, a fantastic R&D department. I expect solid returns from this one. Again, it’s tech…so I wouldn’t go crazy with it.

    XOM is the clear leader in this industry, but the yield always leaves a lot to be desired. I’m spread out across 4 companies, as I’m pretty bullish on energy for the next 10-20 years. I like the higher yield with CVX, TOT and COP.

    Best of luck with your investments! Keep in touch.

  11. Jon says

    Hey Mantra,
    As always, great write up…..one question for you: I respect your analysis and opinion immensely, and one stock on my watch list is Altria. I know you personally own the stock, and I would love to as well with that awesome 6% yield. Although I don’t like smoking myself, I would like to benefit from those that do! The only thing that concerns me is their debt load…..do you think the dividend is not only safe, but one that has the ability to be boosted? Their debt to equity ratio gives me a little heartburn, but I would really appreciate your input and maybe your reason for owning it. Thanks in advance and keep up the great work!

  12. says

    Jon,

    Thanks for the compliments. I’m really glad you enjoy the site. As far as Altria…it’s a little dicey. I’ve read that it’s been the best performing stock over the last 50 years. The future is still unknown. I think it’s great as a smaller position, and I would probably acquire twice as much PM as far as tobacco plays go. Altria does have a significant investment in SABMiller, which is really wonderful. The new labels may hurt them; I’m not sure. Tobacco is just a little fuzzy. I think it’s a great short-term investment that throws off a lot of cash and pays shareholders handsomely, but again, I will probably keep it as a smaller position with all the unknowns.

    The debt load isn’t overly concerning, as tobacco companies tend to have higher debt. The questions are whether the new labels/pictures are going to harm sales and can Altria continue to boost prices as the number of smokers fall off? It’s tough to say.

    Good luck!

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