Monday, June 11, 2007

Big Cap Value Screen

I ran a notorious value screen for companies with a market cap of over $10 billion and below $100 billion with a current price no greater than 5% above the yearly low. Some of the more notable names were Motorola, Starbucks, Newmont Mining, Southwest Airlines, and Gold Fields Ltd.

Motorola is the famous manufacturer of wireless products such as cell phones and network products. They recently have had issues with earnings due to struggles in the mobile device business. Motorola has had trouble replicating the success of their Razr phones and that has led to bad quarterly results. They also had a change in upper management with David Devonshire being replaced by Thomas J. Meredith as the CFO. Carl Icahn has also dabbled with Motorola. There are a lot of famous investors on the long side of Motorola such as Bill Miller, George Soros and Edward Lampert.

Starbucks is the world famous coffee company that everyone loves, including investors until recently. They have been growing just not as fast as the market expected, even an in-line quarter can’t keep the stock up. The expectations that the market has set on this company is that even a slight growth slowdown will beat up the stock. There is some upbeat happenings, there has been a recent insider buy and George Soros is an investor.

Newmont Mining and Gold Fields Ltd are both gold miners. They are both around 35% off their recent highs in early 2006. Even though gold prices are only 10% off its peak, both of these stocks have been significantly down since their early 2006 highs. They both pay a dividend of at least 1%. They are both trading at their 52wk lows. Newmont Mining is owned by George Soros and David Dreman.

Southwest Airlines is the famous low-cost airline. They are 10% off their multi-year lows of $13 a share. The recovering oil price has definitely affected their stock price negatively. Even though their earnings were in-line, their stock has been pressured recently due to slower than expected growth in the upcoming quarters by Wall Street analysts.

Disclosure: I don’t have a position in any of the companies listed.


Anonymous said...

Why is this a notorious screen?

Alex Shadunsky said...

Value investors always recommend looking at stocks that are at their 52wk lows.

Thanks for stopping by.