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DJIA (Dow Jones) S&P 500 Index NASDAQ-100 Dow Theory Benjamin Graham Walmart Valero Exxon Mobil Allegiant Travel Cisco Coca-Cola Chevron Oracle 8.2% (Dec 2011) American Express EARNINGS YIELD Source: Morningstar 8.1% (Dec 2011) Target Corp EARNINGS YIELD Source: Morningstar 8.2% (Dec 2011) The Coca-Cola Co EARNINGS YIELD Source: Morningstar 7.5% (Dec 2011) WALMART EARNING YIELD Source: Morningstar S&P 500 EARNINGS YIELD 1991 4.63% 1992 4.79% 1993 5.77% 1994 6.91% 1995 6.12% 1996 5.49% 1997 4.54% 1998 3.60% 1999 3.52% 2000 4.25% 2001 3.38% 2002 5.23% 2003 4.92% 2004 5.58% 2005 6.12% 2006 6.18% 2007 5.62% 2008 7.24% 2009 5.45% 2010 6.65% Source: nyu.edu U.S. Bond Yield (10-year) 1991, 7.86 1992, 7.01 1993, 5.87 1994, 7.09 1995, 6.57 1996, 6.44 1997, 6.35 1998, 5.26 1999, 5.65 2000, 6.03 2001, 5.02 2002, 4.61 2003, 4.01 2004, 4.27 2005, 4.29 2006, 4.80 2007, 4.63 2008, 3.66 2009, 3.26 2010, 3.22 Source: federalreserve.gov
Average rate on 6-month negotiable certificates of deposit (secondary market)
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2012 UNDERVALUED STOCKS
GILEAD SCIENCES, INC.
(GILD) Gilead Sciences, Inc. (Gilead, we or us), incorporated in Delaware on June 22, 1987, is a biopharmaceutical company that discovers, develops and commercializes innovative therapeutics in areas of unmet medical need. Our mission is to advance the care of patients suffering from life threatening diseases worldwide. Headquartered in Foster City, California, we have operations in North America, Europe and Asia Pacific. To date, we have focused our efforts on bringing novel therapeutics for the treatment of life threatening diseases to market. We continue to seek to add to our existing portfolio of products through our internal discovery and clinical development programs and through a product acquisition and in-licensing strategy.
Sysco Corp (SYY) Sysco Corporation, acting through its subsidiaries and divisions, is the largest North American distributor of food and related products primarily to the foodservice or food-away-from-home industry. We provide products and related services to approximately 400,000 customers, including restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers. Founded in 1969, Sysco commenced operations as a public company in March 1970 when the stockholders of nine companies exchanged their stock for Sysco common stock. Since our formation, we have grown from $115.0 million to $39.3 billion in annual sales, both through internal expansion of existing operations and through acquisitions.
(ALGT) Allegiant Travel Co We are a leisure travel company focused on providing travel services to residents of small, underserved cities in the United States. We operate a low-cost passenger airline marketed to leisure travelers in small cities, allowing us to sell air travel both on a stand-alone basis and bundled with hotel rooms, rental cars and other travel related services. Our route network, pricing philosophy, advertising and diversified product offering built around relationships with premier leisure companies are all intended to appeal to leisure travelers and make it attractive for them to purchase air travel and related services from us. Our business model provides for diversified revenue streams, which we believe distinguishes us from other U.S. airlines and travel companies: Scheduled service revenue consists of air fare from our limited frequency nonstop flights between our small city markets and our leisure destinations. Ancillary revenue is generated from air-related charges and third party products. Air-related charges are generated through fees for use of our website to purchase tickets, checked bags, advance seat assignments, priority boarding and other services provided in conjunction with our scheduled air service. We also generate revenue from the sale of third party products such as hotel rooms, ground transportation (rental cars and hotel shuttle products) and attraction and show tickets. We recognize our ancillary revenue net of amounts paid to service providers, travel agent commissions and credit card processing fees.
COCA COLA CO (KO) The Coca-Cola Company is the world's largest nonalcoholic beverage company. We own or license and market more than 500 nonalcoholic beverage brands, primarily sparkling beverages but also a variety of still beverages such as waters, enhanced waters, juices and juice drinks, ready-to-drink teas and coffees, and energy and sports drinks. Along with Coca-Cola, which is recognized as the world's most valuable brand, we own and market four of the world's top five nonalcoholic sparkling beverage brands, including Diet Coke, Fanta and Sprite. Finished beverage products bearing our trademarks, sold in the United States since 1886, are now sold in more than 200 countries. We make our branded beverage products available to consumers throughout the world through our network of Company-owned or controlled bottling and distribution operations, bottling partners, distributors, wholesalers and retailers — the world's largest beverage distribution system. Of the approximately 55 billion beverage servings of all types consumed worldwide every day, beverages bearing trademarks owned by or licensed to us account for approximately 1.7 billion. We believe that our success depends on our ability to connect with consumers by providing them with a wide variety of options to meet their desires, needs and lifestyle choices. Our success further depends on the ability of our people to execute effectively, every day. Our goal is to use our Company's assets — our brands, financial strength, unrivaled distribution system, global reach and the talent and strong commitment of our management and associates — to become more competitive and to accelerate growth in a manner that creates value for our shareowners. (GOOG) GOOGLE INC Google is a global technology leader focused on improving the ways people connect with information. We aspire to build products that improve the lives of billions of people globally. Our mission is to organize the world’s information and make it universally accessible and useful. Our innovations in web search and advertising have made our website a top internet property and our brand one of the most recognized in the world. "... common stocks are subject to irrational and excessive price fluctuations in both directions ..." --Benjamin Graham Berkshire Hathaway Stocks Buy Oil Stocks Annual Average Domestic Crude Oil Prices, 1950-2000, U.S. Average (in $/bbl.) Year Nominal Inflation Adjusted 1950 $2.77 $24.42 1960 $2.91 $20.88 1970 $3.39 $18.56 1980 $37.42 $97.47 1990 $23.19 $37.69 2000 $27.39 $33.79 The
above data shows the nominal and inflation adjusted prices of crude oil
at the beginning of the decade from 1950 - 2000. The long-term price
trend has been upwards. The nominal price went from $2.77 in 1950 to
$27.39 in 2000. During the high-inflation period of 1970 - 1980, the
price increased more than 10 times in only 10 years. The inflation
adjusted price trend shows that the price of crude oil has exceeded the
rate of inflation. The current price of crude oil of around $75 is
almost 3 times the price of 10 years ago. Going forward, if investments
in crude oil are made, the returns should be greater than the rate of
inflation. Any price spikes, such as the one that occurred in the
1970s, should be avoided. We believe the current price is not a spike,
although investments in crude oil should be in small amounts over time.
We estimate the average price between 2025 and 2050 to be between $100
and $300 (nominal). It is possible that the high U.S. national debt may
cause high amounts of inflation in the decades ahead.
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UNDERVALUED STOCKS
Our stock recommendations have a price that is low relative to book value and earnings history. We believe our stocks as a group will produce a positive return, although some stocks may fall below their purchase price due to the volatile nature of the investments. Our goal is to outperform the S&P 500 by 10 percent over the long-term. We favor the stocks in the following list because they are the most undervalued stocks we have discovered. When you are able to find stocks that few others take an interest in but are extremely undervalued relative to their intrinsic value, the probability of profits is greatly increased. STOCKS TO BUY 2011 NUSTAR ENERGY LP TESORO CORP JOHNSON & JOHNSON APPLE INC WAL MART STORES INC COCA COLA CO MICROSOFT CORP CHEVRON CORP GOOGLE INC ORACLE CORP EXXON MOBIL CORP VALERO ENERGY CORP (VLO) ALLEGIANT TRAVEL CO (ALGT) Our Commitment At Undervalued-Stock.com, we treat our clients with courtesy and integrity. We guarantee realistic, honest financial advice that achieves results. We will lead you on a course to financial freedom. Our years of experience and notable expertise ensure that your financial future is in good hands. Our consistent track record of uncompromising ethics instills confidence and trust. We use cutting edge technologies to ensure up to the minute information from the financial world. This allows us to respond quickly, and give you the most relevant information and perspective. We are committed to providing you with the best possible financial service possible. We focus on investments that we believe are undervalued based on fundamental valuation criterion, such as PE and PB values. We find undervalued stocks by screening stocks and comparing criterion to historic values. Over a 10 to 20 periods, a stock can fluctuate widely in price, and we seek to identify stocks at a low point in their history, with a positive outlook. |
 The chart above shows the movement of the stock market for one year up to Dec 29, 2011.
The chart above shows the Dow Jones Industrial Average for 100 years from 1900 to 2000.
 Source: Jeremy J. Siegel |
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S&P 500 Stocks
The above chart illustrates the theory that stocks were fairly valued or undervalued before 1994. Between 1995 and 2000, a bubble occurred that lifted the S&P 500 to over 1400. The ensuing crash from 2000-2002 resulted from the bursting of the bubble by high interest rates. Between 2002-2007, the S&P 500 was boosted once again by low interest rates, easy credit and rising real estate prices. If the S&P 500 had been purchased near or below the red line, the investment would have been the most profitable (if sold near the peak). Around 800 was the floor and around 1600 was the ceiling for the S&P 500 during the past decade. The average of 800 and 1600 is 1200.
The Dow Jones Industrial Average currently consists of the following 30 major American companies:
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