5 Big-Cap Bargains

 | Apr 19, 2013 | 2:00 PM EDT
  • Comment
  • Print Print
  • Print
Stock quotes in this article:










The average big-cap stock is up more than 11% in the past 52 weeks, but in the past few days a few large, well-known stocks have hit 52-week lows. Almost all these unpopular shares are buys at current prices.

Apple (AAPL): I will be brief to the point of curtness because my fellow Real Money columnists have written extensively about Apple. But here we have a company with a rich tradition of innovation, debt-free, selling for less than 9x earnings. If you buy below $400 a share, you will be happy a year hence.

Apache (APA): This oil and gas exploration-and-production company is undervalued, I believe. If analysts have it right, this year will be Apache's second best ever, with more than $9 a share in earnings. Next year will be better yet, with more than $10 a share in earnings, though that would still be below the peak figure of $11.47 in 2011. At about $70, Apache's stock price is almost exactly half of the peak price, which was about $142 in mid-2008. The shares fetch only 7x earnings and are trading below book value. I don't think you have to be a big energy bull to like Apache at these levels.

Freeport-McMoRan Copper & Gold (FCX): Mining shares have been taking it on the chin lately, including Freeport-McMoRan, which has fallen 18% this year in an up market. Copper prices allegedly predict economic trends, and lately the falling price of copper suggests a gloomy outlook. Investors seem to anticipate a slowdown in China, stagnation in Japan, continued recession in Europe and a wobbly recovery in the U.S. I, however, foresee a robust recovery in the U.S. and an upturn in Europe beginning next year. If I'm right, Freeport will be able to continue its dividend of $2.44 a share, which affords a 4.5% yield. And the shares, recently about $28, could tack on another $10 or so in capital appreciation.

Newmont Mining (NEM): I held Newmont, the largest U.S. gold miner, personally and for clients last year. It did poorly, and I sold it earlier this year. But after falling 31% in the past 12 months, Newmont stock may surprise the skeptics. Only 44% of analysts rate it a Buy. But it looks attractive to me at 9x earnings, with a dividend yield around 5%.

Alcoa (AA): This one I'm less keen on. Alcoa hasn't broken $1 a share in earnings since 2007. If analysts are right, it will be 2015 before it does so again. Return on equity last year was a paltry 1.8%. At about $8 a share, it may be a little underpriced, but there are better bargains around.

Columnist Conversations

View Chart »  View in New Window »
this chart is showing great bullish signs here, we like this to take out the old high shortly. ...
Now that AAPL has violated the shorter term support, these are the two areas I have to consider for new buy en...



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.