As we near to the end of 2014, investors are looking ahead to 2015 and evaluating what stocks they should add or remove from their portfolios. A lot of this decision making concerns how a company is valued and whether it retains or grows its value over time. Relative to recent closing prices, 24/7 Wall St. has compiled a group of the five cheapest Dow Jones Industrial Average (DJIA) stocks.
These stocks were evaluated on the basis of future earnings in 2015, against closing prices from Tuesday, December 23. This will leave only four trading sessions left in the year, which are generally characterized by light volume and light attendance from major traders.
24/7 Wall St. has included brief color on each of the likely cheapest Dow stocks for 2015. We have also included dividend yields, the 52-week trading range and the consensus analyst price target for each.
Cisco Systems Inc. (NASDAQ: CSCO) is trading with a price-to-earnings (P/E) ratio of 12.6 against 2015 earnings. Now this trend can continue through 2015, but the company must continue to grow its earnings in line with its guidance given in November. Note that at its first-quarter earnings in November, the company had a forward P/E ratio of roughly 11.6, which has since increased. A recent deal with Rockstar Consortium will give Cisco, along with other major tech companies, access to thousands of patents that have the potential to greatly help out business going forward. It is unclear at the moment how Cisco will use its access to these patents, but these very well may play into future earnings.
Shares of Cisco closed Tuesday at $28.25, within a 52-week trading range of $21.27 to $28.50. The stock has a consensus analyst price target of $27.21, against a street-high target of $33.00 and a low target of $16.00. Cisco has a dividend yield of 2.8% and a market cap of $144 billion.
Travelers Companies Inc. (NYSE: TRV) is trading with a P/E ratio of 11.4 on 2015 earnings. Recently, the company announced plans to expand overseas in a joint venture in Colombia. By the first half of 2015, Travelers, along with J. Malucelli, will acquire a start-up surety provider based out of Bogota. This will further give Travelers access to this emerging market, as well as diversifying its holdings.
Shares closed Tuesday at $106.95, in a 52-week trading range of $79.89 to $107.29. From analysts, the stock has a consensus price target of $99.67, compared to the high target of $112.00 and the low of $85.00. Travelers has a dividend yield of 2.1% and a market cap of $35 billion.
Goldman Sachs Group Inc. (NYSE: GS) trades with a forward P/E ratio of 11.3. It continues to be the gold standard of Wall Street banks, with its high net worth clientele, top investment banking and capital markets expertise. Goldman Sachs has benefited from the long secular bull market run. While the trajectory may slow in 2015, any upside to the market can nudge revenues even higher. It is also worth noting that Deutsche Bank picked Goldman Sachs, as well as J.P. Morgan, as its top large-cap bank stocks for 2015.
Goldman Sachs shares closed Tuesday at $195.50, in a 52-week trading range of $151.65 to $198.06. The highest analyst price target is $225.00 and the lowest is $138.00, compared to the consensus price target of $188.09. The dividend yield is 1.3% and the market cap is $88 billion.
JPMorgan Chase & Co. (NYSE: JPM) has a forward P/E ratio of 10.5 on 2015 earnings. The company is expected to benefit from commercial loan growth and an upturn in capital spending. The Deutsche Bank team noted in their report that the stock seems attractively valued, with the lowest P/E ratio among market-sensitive banks and a very solid price-to-book value. Some on Wall Street have cautioned that the recent divestiture of the physical commodities business could provide an earnings headwind next year. The Deutsche Bank analysts pointed out that the improvement in loan growth and a steady increase in deposits will be a solid plus.
Shares of J.P. Morgan closed Tuesday at $62.48, within a 52-week trading range of $52.97 to $63.16. The consensus analyst target of $67.90 is against a high target of $76.00 and a low target of $61.00. J.P. Morgan has a dividend yield of 2.6%, and its market cap is $233 billion.
International Business Machines Corp. (NYSE: IBM) is trading with a P/E ratio of 9.6 against 2015 earnings. Still, IBM screens out as a cheap stock despite no revenue growth at all. Some analysts have grown very leery of that due to earnings quality and buybacks. However, 24/7 Wall St. has previously outlined how IBM could turn it around in 2015. Its current consensus price target is $168.67, while the highest analyst target is $198, and the lowest is from Credit Suisse, which warned that IBM could ultimately fall to $125.
Shares of Big Blue closed Tuesday at $162.24. The 52-week trading range is $150.50 to $199.21, and the consensus price target is $168.67. It has a dividend yield of 2.8% and a market cap of $160 billion.