Any way you look at the metrics, from a historical standpoint stocks are expensive. Not late 1999 or 2000 expensive, but very pricey. One of the main reasons most investors keep leaning toward the equity markets is the persistent low interest rates and the seemingly overvalued bond market. A new research report from Deutsche Bank continues to stress that investors should look for value in large cap, safe names that are cheap.
We took their list of top large cap names that were trading at reasonable multiples, and screened for the stocks trading under 10 times estimated 2014 earnings. Five top stocks showed up, and could make good investments for the second half of the year.
Hewlett-Packard Co. (NYSE: HPQ) is trading at a very low nine times 2014 estimated earnings. The company has had a remarkable comeback under the leadership of Silicon Valley veteran Meg Whitman. Her most important point for 2014 is her plan to use free cash flows in order to reduce the existing debt, repurchase new shares and maintain the dividend payout policy. All of that is in the best interest of shareholders.
HP’s share in 1Gigabit E fixed switching improved 10 basis points or one-tenth of 1% year over year, as it continues to benefit from its local presence and brand name (H3C) in China. Other U.S. vendors are increasingly challenged for new business in the region. Investors are paid a 1.8% dividend. The Thomson/First Call price target for the stock is $36.11. HP shares closed Friday at $34.22.
MetLife Inc. (NYSE: MET) is a top insurance stock and trades at a low 9.7 times estimated 2014 earnings. The company is a leading global provider of insurance, annuities and employee benefit programs. MetLife holds leading market positions in the United States, Japan, Latin America, Asia, Europe and the Middle East. Investors are paid a 2.5% dividend. The consensus price objective for the stock is $61.13. MetLife closed Friday at $56.45.