Barron's Undervalued & Overvalued Stocks
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Date updated:07-26-2008

ConocoPhillips, Goodyear Tire and Gannett are among those companies whose scant P/Es belie their embedded value. And Monsanto and Google might not be overpriced.

symbol name last price % change open
  • +
  • AIG
    Amer Intl Group I
  • $1.74
  • +4.82%
  • $1.70

At 27, AIG trades for 5 times the 2009 consensus estimate of $5.40 and below book value of $33.

People owning AIG also tend to own: AAIBMINTCJNJJPMKOMSFT

TheStreet.com Rating: D+ What is this?

  • +
  • GCI
    Gannett Co Inc
  • $9.30
  • +4.49%
  • $8.98

Gannett, whose shares have fallen this year by 54%, to 18, after a 35% decline in 2007, is the leader in what may be the most hated market sector: newspapers. Its second-quarter earnings were down 22%, to $1.01 a share, and the rest of the year looks difficult. A lot of bad news, however, already is in its shares, which trade for less than six times projected 2009 profits. Gannett is a long way from going out of business. Instead, it's a highly contrarian investment. Investors get a 9% dividend yield, well-covered by earnings.

People owning GCI also tend to own: AIGCLUKMROMSFTPFETRB

TheStreet.com Rating: D What is this?

  • +
  • MRO
    Marathon Oil Corp
  • $29.87
  • +1.81%
  • $30.16

Marathon, whose shares fell 21% to 42 in the past month, also has a mini-P/E of 5.2, owing to its exposure to the refining business, which has been hurt by sharply lower margins this year. Marathon's fans, like Sanford Bernstein analyst Neil McMahon, argue that the company is misperceived as a refining play, while it should get more than half its profits next year from an attractive and growing base of oil- and gas-producing assets. Marathon also could be a takeover target, given a digestible market value of $30 billion.

People owning MRO also tend to own: AMDBMYCAGFMSJCOMUNHAA

TheStreet.com Rating: C What is this?

  • +
  • COP
    Conocophillips
  • $55.68
  • +0.38%
  • $56.53

All the major U.S. energy companies -- Chevron (CVX) ExxonMobil (XOM) and ConocoPhillips -- trade for less than eight times projected '09 net, and Conoco is the cheapest of the lot. The stock, off 13% from its June peak, to 82, fetches six times projected 2008 profits of $13.03 a share and 5.8 times estimated '09 net of $14.13 a share. Conoco last week reported second-quarter operating net of $3.50 a share, up from $2.90 a year ago, despite a collapse in refining profits. The Street knocks Conoco for disappointing exploration efforts, but should the stock trade at a P/E of just six?

People owning COP also tend to own: AAALLAPCBUDCVXDOWGSK

TheStreet.com Rating: C+ What is this?

  • +
  • GT
    Goodyear Tire Rub
  • $7.51
  • +7.75%
  • $7.19

Goodyear Tire, a victim of a weak U.S. auto market, is down 28% this year, to 19. The tire maker trades for seven times projected 2009 profits of $3.18 a share.

People owning GT also tend to own: CELGIACIRADSTXNVARBRLERES

TheStreet.com Rating: C- What is this?

  • +
  • GOOG
    Google Inc.
  • $334.06
  • +1.83%
  • $332.50

Even Google (GOOG), often described as a high-flier, trades for a relatively modest 20 times projected 2009 profits of $24. Google shares are down 29% this year, to $490. "The high-end multiples aren't too high," says Jim Paulsen, the chief investment strategist at Wells Capital Management in Minneapolis, who prepared the screen.

People owning GOOG also tend to own: AAPLAMDCSCODELLIBMINTCMSFT

TheStreet.com Rating: C What is this?

  • +
  • ISRG
    Intuitive Surgica
  • $122.19
  • -2.67%
  • $126.28

Intuitive Surgical dominates the field of robotic-surgery devices, but it's tough to justify the stock's gargantuan multiple

People owning ISRG also tend to own: ABBASEINVSPGAAPLANZBY.PKBAM

TheStreet.com Rating: B- What is this?

  • +
  • AMZN
    Amazon.com
  • $57.36
  • +6.10%
  • $54.55

Among the high-P/E stocks, Amazon.com reported second-quarter results that topped estimates, boosting its shares 11%, to $78. Amazon trades at 37 times estimated 2009 profits, one of the highest P/Es for any big S&P 500 company.

People owning AMZN also tend to own: AAPLAMTATHRBEASCTSHEMCGOOG

TheStreet.com Rating: C+ What is this?

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