In order to keep a focus on giant stocks from the liquidity perspective, I have highlighted below a few stocks that have large market caps. I find two stocks are currently at attractive valuations and may generate big waves towards the peak and also highlight one stock as a good short-sell on the basis of extremely expensive valuations.
Bank of America (BAC, Financial) is a financial institution offering banking, investing, asset management and other financial and risk management services. The group has six business segments: Deposits, Global Card Services, Home Loans & Insurance, Global Commercial Banking, Global Banking & Markets and Global Wealth & Investment Management. The company was amongst the worst hit financial institution in the recent financial crisis.
Bank of America is trading at extremely cheap valuations – a P/TBV of 0.65 times compared to a peer average of 1.41 times. Its forward earnings per share are expected to grow by 45.8% compared to an average growth of 18.3% expected from its peers. On the basis of its forward earning multiple, the stock trades at 7.6 times compared to an industry average of 11.0 times. However, the dividend yield offered by the company is on the lower side at 0.6%, compared to an average of 2.4% offered by its competitors. I prefer this stock primarily on the basis of valuations, and hence, propose a Buy stance on the stock.
Sirius XM Radio (SIRI, Financial) is a broadcaster of subscription fee based music, sports, news, talk, entertainment, traffic and weather channels in the U..S. The company also provides its services through applications for Apple, Blackberry and Android-powered mobile devices. In addition to this, the company markets satellite radios through automakers, retail stations, and via Websites. Its subscriber base currently stands at 20 million. In April 2010, XM Satellite Radio Holdings Inc. merged with XM Satellite Radio Inc., which later in January 2011, merged into Sirius XM Radio Inc.
On the basis of valuations, the stock is trading extremely expensive compared to its peers. The stock currently trades at forward price to earnings and EV/EBITDA multiples of of 28.5 times and 11.0 times respectively compared to a peer average of 16.3 times and 7.1 times respectively. The PEG Ratio for the stock stands at 1.14 times (with a peer average of 1.11 times) and the forward earnings per share growth expected from the company is at 13% (with a peer average of 38.3%). I do not like the stock due to its expensive valuations. Hence I suggest investors Sell the stock.
Yahoo! (YHOO, Financial) is a digital media company that provides online properties and services, while at the same time it provides a range of marketing services to advertisers. Its offerings to users on Yahoo! Properties fall into three categories: Communications and Communities, Search and Marketplaces, and Media. In December 2010, the company acquired Dapper (a technology platform) and Citizen Sports. During the same year, it acquired Koprol – an Indonesian social network. Later in October 2011, it offloaded its investment in Consim Info Pvt Ltd. The stock does not seem very attractive on relative valuations. It is currently trading at forward price to earnings and EV/EBITDA ratios of 18.9 times and 12.0 times compared to industry averages of 23.2 times and 11.7 times respectively. The PEG ratio for the company also remains in-line with its peers at 1.47 times, while its expected earnings per share growth stand at 2.1%. This is well below the peer average of 14.4%. The company’s Valuations do not seem strong, while its current year growth also seems muted. Hence, I find the stock unattractive at current prices.
General Electric (GE, Financial) is a diversified industrial, technology and financial services company offering a range of products and services such as: aircraft engines, power generation, water processing, household appliances, business and consumer financing and other industrial products. The Company has divided its operations into various segments: Energy Infrastructure, Technology Infrastructure, NBC Universal, GE Capital and Home & Business Solutions. In February 2011, General Electric acquired Dresser Inc., Wellstream Plc, and later in September 2011, it launched a new company named - Research Circle Technology Inc. In October 2011, the company's Financial Services division bought majority stakes in Lightfoot Capital Partners L.P. The stock is currently not trading at attractive valuations compared to its peers in the industry. It is trading at forward price to earnings and EV/EBITDA ratios of 12.4 times and 21.8 times compared to the peer average of 14.0 times and 9.3 times respectively. However, the dividend yield offered by the company is on the higher side at 3.6% compared to the peer average of 2.0%. I propose a Neutral stance on the stock, given its unattractive valuations and limited growth in the upcoming earnings per share.
Sprint Nextel (S, Financial), through its subsidiaries, offers a range of wireless and wireline communications products and services across United States, while its retail brands in networks include Sprint, Nextel, Boost Mobile, Virgin Mobile, Assurance Wireless and Common Cents SM. The stock trades very cheap on P/BV and EV/EBITDA ratios at 0.61 times and 4.35 times compared to the peer average of 2.41 times and 6.07 times respectively. The company’s forward earnings per share are also expected to grow by 54% compared to a growth of 6.4% for its peers. I recommend this stock to the investors primarily on the basis of the growth in its forward earning per share that may lead to an appreciation in stock price.
Bank of America (BAC, Financial) is a financial institution offering banking, investing, asset management and other financial and risk management services. The group has six business segments: Deposits, Global Card Services, Home Loans & Insurance, Global Commercial Banking, Global Banking & Markets and Global Wealth & Investment Management. The company was amongst the worst hit financial institution in the recent financial crisis.
Bank of America is trading at extremely cheap valuations – a P/TBV of 0.65 times compared to a peer average of 1.41 times. Its forward earnings per share are expected to grow by 45.8% compared to an average growth of 18.3% expected from its peers. On the basis of its forward earning multiple, the stock trades at 7.6 times compared to an industry average of 11.0 times. However, the dividend yield offered by the company is on the lower side at 0.6%, compared to an average of 2.4% offered by its competitors. I prefer this stock primarily on the basis of valuations, and hence, propose a Buy stance on the stock.
Sirius XM Radio (SIRI, Financial) is a broadcaster of subscription fee based music, sports, news, talk, entertainment, traffic and weather channels in the U..S. The company also provides its services through applications for Apple, Blackberry and Android-powered mobile devices. In addition to this, the company markets satellite radios through automakers, retail stations, and via Websites. Its subscriber base currently stands at 20 million. In April 2010, XM Satellite Radio Holdings Inc. merged with XM Satellite Radio Inc., which later in January 2011, merged into Sirius XM Radio Inc.
On the basis of valuations, the stock is trading extremely expensive compared to its peers. The stock currently trades at forward price to earnings and EV/EBITDA multiples of of 28.5 times and 11.0 times respectively compared to a peer average of 16.3 times and 7.1 times respectively. The PEG Ratio for the stock stands at 1.14 times (with a peer average of 1.11 times) and the forward earnings per share growth expected from the company is at 13% (with a peer average of 38.3%). I do not like the stock due to its expensive valuations. Hence I suggest investors Sell the stock.
Yahoo! (YHOO, Financial) is a digital media company that provides online properties and services, while at the same time it provides a range of marketing services to advertisers. Its offerings to users on Yahoo! Properties fall into three categories: Communications and Communities, Search and Marketplaces, and Media. In December 2010, the company acquired Dapper (a technology platform) and Citizen Sports. During the same year, it acquired Koprol – an Indonesian social network. Later in October 2011, it offloaded its investment in Consim Info Pvt Ltd. The stock does not seem very attractive on relative valuations. It is currently trading at forward price to earnings and EV/EBITDA ratios of 18.9 times and 12.0 times compared to industry averages of 23.2 times and 11.7 times respectively. The PEG ratio for the company also remains in-line with its peers at 1.47 times, while its expected earnings per share growth stand at 2.1%. This is well below the peer average of 14.4%. The company’s Valuations do not seem strong, while its current year growth also seems muted. Hence, I find the stock unattractive at current prices.
General Electric (GE, Financial) is a diversified industrial, technology and financial services company offering a range of products and services such as: aircraft engines, power generation, water processing, household appliances, business and consumer financing and other industrial products. The Company has divided its operations into various segments: Energy Infrastructure, Technology Infrastructure, NBC Universal, GE Capital and Home & Business Solutions. In February 2011, General Electric acquired Dresser Inc., Wellstream Plc, and later in September 2011, it launched a new company named - Research Circle Technology Inc. In October 2011, the company's Financial Services division bought majority stakes in Lightfoot Capital Partners L.P. The stock is currently not trading at attractive valuations compared to its peers in the industry. It is trading at forward price to earnings and EV/EBITDA ratios of 12.4 times and 21.8 times compared to the peer average of 14.0 times and 9.3 times respectively. However, the dividend yield offered by the company is on the higher side at 3.6% compared to the peer average of 2.0%. I propose a Neutral stance on the stock, given its unattractive valuations and limited growth in the upcoming earnings per share.
Sprint Nextel (S, Financial), through its subsidiaries, offers a range of wireless and wireline communications products and services across United States, while its retail brands in networks include Sprint, Nextel, Boost Mobile, Virgin Mobile, Assurance Wireless and Common Cents SM. The stock trades very cheap on P/BV and EV/EBITDA ratios at 0.61 times and 4.35 times compared to the peer average of 2.41 times and 6.07 times respectively. The company’s forward earnings per share are also expected to grow by 54% compared to a growth of 6.4% for its peers. I recommend this stock to the investors primarily on the basis of the growth in its forward earning per share that may lead to an appreciation in stock price.
