Screening Results (June 2016)

Best Prices Vs. Fair Value: Morningstar

by Mark Robertson

Is the market cheap or expensive? We don’t really pay much attention to this, instead rendering that same opinion on a stock-by-stock basis as we hunt for quality companies at bargain prices. This month, we display a baker’s dozen of good/excellent quality companies with the lowest price-to-fair value ratios in the Morningstar coverage universe.

Good or Excellent — At A Discount

The only exception is Fiat Chrysler (FCAU) because this one is very close to home. The low quality may be off set by a continuing strong vehicle market where the sale of Jeeps and minivans continues to persist. The other potential is a buyout by Volkswagen or some other multi-national entrant and Morningstar’s red tag sale (46%) on Chrysler is echoed by the likes of ACE, S&P and Goldman Sachs.

There are a number of retailers that have hammered into red tag status by stock shoppers over the last few months. Swatch (SWGAY) is relatively uncovered and worth a closer look for many of the same reasons. Recent selections Allergan (AGN), Gilead (GILD), Polaris (PII) and Skyworks (SWKS) continue to be worthy study. Take a Bayer (BAYRY) and call your broker in the morning.

Morningstar P/FV Study Candidates. (June 6, 2016) The companies displayed are ranked by Price/Fair Value (Ascending). Projected Annual Return (PAR): Consensus based return forecast based on 5-year time horizon. Quality Ranking: Percentile ranking of composite that includes financial strength, earnings stability and relative growth & profitability. Value Line Low Total Return (VLLTR) Forecast: Total Return based on low price forecast for 3-5 year time horizon. Morningstar Fair Value: Estimated price of stock, based on discounted cash flow, that would fully reflect all assumptions about enterprise value. Morning Stars: Based predominantly on return forecast, stocks are rated from 1-to-5 Stars (high returns). S&P P/V: Standard & Poor’s price-to-fair value. ACE: Analyst consensus estimates. GS: Goldman Sachs, 1-year price targets based on most recent research. Sources: Value Line Investment Survey, Morningstar, S&P Capital IQ, finance.yahoo.com, Manifest Investing