Long Term Value/Growth

[clarkrl2]

At MSN we had a long term thread. I occassionally make some buys that I intend to hold until the market sees the value that I believe is in the company (or at least until I have to admit I was wrong). This thread should be reserved for holding periods of at least one year.

[clarkrl2]

GNW (Genworth Financial - Life Insurance)

This stock has a price to book of .29. The chart looks terrible but I wanted to buy before their earning report tomorrow in case it turns out to be better than expected. When looking over the company I noticed several officers have been buying and the only seller is the Chief Legal Council.

Some of the valuation ratios look poor but I believe they will eventually turn the company around. P/B most recent quarter .29. Price to tangible book .34. Price to sales .4. Price to sales including debt 1.31.

The company showed 7.63 cash per share last quarter and is trading at around 8.25 (my purchase price). I think a person may have to wait a while for the value to surface but it looks like the market is pricing it for bankruptcy. I don't think there would be insider buying if the officers thought this was going to be the case so I am willing to take a chance at this price.

more statistics at Yahoo

[Bluerobin]

I have always like NUE, Nucor, a steel recycler and producer. They are extremely well managed and pay a healthy dividend. All they need is a few sales to take off. Right now, the stock is on sale, but will remain depressed until the economy turns.

[bimetalaupt]

Jul 27, 2011 11:00:33 GMT -5 clarkrl2 said:

GNW (Genworth Financial - Life Insurance)

This stock has a price to book of .29. The chart looks terrible but I wanted to buy before their earning report tomorrow in case it turns out to be better than expected. When looking over the company I noticed several officers have been buying and the only seller is the Chief Legal Council.

Some of the valuation ratios look poor but I believe they will eventually turn the company around. P/B most recent quarter .29. Price to tangible book .34. Price to sales .4. Price to sales including debt 1.31.

The company showed 7.63 cash per share last quarter and is trading at around 8.25 (my purchase price). I think a person may have to wait a while for the value to surface but it looks like the market is pricing it for bankruptcy. I don't think there would be insider buying if the officers thought this was going to be the case so I am willing to take a chance at this price.

more statistics at Yahoo

If you ask me the street is saying the book value is over stated .. CDO or Real Estate loans that are worth less then 50% of face value that have not been marked to market.

Just a thought,
Bi Metal Au Pt

[clarkrl2]

I know there is some risk associated with GNW but they did have a positive cash flow with a low price to free cash flow multiple. They had net positive insider buying. Sometimes I'm wrong on these kind of buys but when I'm right the returns are extremely good. I have less than 3% of my portfolio in this play.

[clarkrl2]

Today I picked up some Northrup Gruman. The analyst long term growth forecasts are rather low at 7.94% but with a PE of 8.37 and forward PE of 7.45 it appears to be favorably valued. The dividend is at 3.74%. Here is a Zack's article on aerospace and defense outlook. finance.yahoo.com/news/Aerospace-and-Defense-Stock-zacks-504028979.html?x=0&.v=1
For this type of value stock I like to screen for stocks where the long term growth times the annual earnings estimate is less than the current price. I also use another valuation formula based on sales. Yield >1%. Payout ration < 50. I have a few other parameters as well. This was number five on the screen when ranked by PE - yield. There were two Chinese stocks XIN and SNP and an Ireland based STX ranked ahead of NOC and also DDIC( I already had a position in this). Since I am not buying anything out of the US right now I chose NOC. With the current economy an investor will likely have to be patient on this type of stock.