General Dynamics, Potash Corp. and Other Stocks Worth a Look
The hunt for bargains can be a never-ending quest. Analysts are bullish on the following dividend payers, judging by the consensus recommendations to buy shares and the mean price targets that imply upside potential. These possibly undervalued stocks have low P/E and PEG ratios, EPS and sales growth over the past five years and anticipated EPS growth over the next five. These stocks also all have pulled back at least 2 percent in the past month, offering potential entry points.
Cenovus Energy (NYSE: CVE) is well off its 52-week high but has popped more than 7 percent in the past week. The Canadian integrated oil company posted strong second-quarter results due to "increases in oil production favourable refining results." The $24.7 billion market cap company has a dividend yield of about 2.7 percent and an operating margin that is better than the industry average. Short interest is less than 1 percent of the float, and the mean price target is a couple of bucks higher than the 52-week high.
Like other defense contractors, General Dynamics (NYSE: GD) pulled back in late spring and has traded mostly between $62 and $66 per share since then. But the analysts' mean price target is $74.14 which is near the 52-week high. This S&P 500 component has a market cap greater than $22 billion and a dividend yield of more than 3 percent. The operating margin is higher than those of peers such as Boeing (NYSE: BA) and Textron (NYSE: TXT). Short interest is a little more than 1 percent of the float.
Giant Interactive Group (NYSE: GA) is up more than 4 percent this week after reporting better-than-expected second-quarter EPS. The Shanghai-based online game developer has a market cap near $1.1 billion and a dividend yield of about 6.5 percent. Its return on equity is more than 20 percent. The mean target price is about 27 percent higher than the current share price, and higher than the 52-week high as well. Over the past six months, the stock has outperformed competitor Perfect World (NASDAQ: PWRD) and the broader markets.
Potash Corp. of Saskatchewan (NYSE: POT) fell about 6 percent after it released disappointing second-quarter earnings and lowered its full-year EPS outlook. The return on equity of this fertilizer producer is a healthy 30.3 percent and its long-term EPS growth forecast is more than 12 percent. The company has a market cap near $37 billion. 20 out of 27 analysts polled by Thomson First Call recommend buying shares. Their mean price target is about 20 percent higher than the current share price.
Shares of Stepan Company (NYSE: SCL) had started to drop even before it reported disappointing second-quarter earnings in July, but the share price is up more than 3 percent in the past week. This chemical manufacturer has a market cap of about $960 million and a long-term EPS growth forecast of about 15 percent. The mean price is more than 16 percent higher than the current share price. Even with the recent pullback, over the past six months the stock has outperformed the broader markets.
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