In an incredible snapshot of just how strong the rally of the last nine and a half years has been, only nine companies from the S&P 500 are trading today below their prices when the market bottomed in March of 2009, according to research from Bespoke. While it is amazing so many are up, it’s even more amazing for shareholders of the nine that are down, especially if they have held them all along.
At 24/7 Wall St., we thought the statistic was so incredible, especially since some of the companies are solid players in their respective sectors, we wanted to see if any were rated Buy. We screened the Merrill Lynch research universe and found four with Buy ratings. These could be outstanding values for true value buyers.
This company offers solid value, has zero foreign sales exposure and has kept its dividend intact. CenturyLink, Inc. (NYSE: CTL) is the nation’s third-largest telephone company and the largest rural exchange provider serving residential, enterprise and wholesale customers. It is the product of the acquisition of Embarq by CenturyTel in 2008, Qwest Communications in 2011 and Level 3 Communications in 2017. Embarq is Sprint’s former wireline unit.
With the Level 3 acquisition doing well and things looking up for the company, many analysts are starting to come around on the stock. Merrill Lynch has been positive on the shares for some time, and the firm expects the company’s strong free-cash-flow generation to support the dividend through 2019 and beyond. CenturyLink still trades almost 20% below its March 9 close of $23.56.
Its investors receive a gigantic 11.59 % dividend. The Merrill Lynch price target for the shares is a whopping $29, while the Wall Street consensus target is $21.27. The stock closed trading on Thursday at $18.96.
This company has been hit as oil has tumbled, and it is still over 15% below the close on March 9 of 2009. Devon Energy Corp. (NYSE: DVN) is an independent energy company that primarily engages in the exploration, development and production of oil, natural gas and natural gas liquids (NGLs) in the United States and Canada. It operates approximately 19,000 wells.
The company also offers midstream energy services, including gathering, transmission, processing, fractionation and marketing to producers of natural gas, NGLs, crude oil and condensate through its natural gas pipelines, plants and treatment facilities.
The company says it has plans to divest assets worth $1 billion that are non-core, including portions of the Barnett Shale, with an anticipated sale occurring in the next 12 to 18 months. Proceeds will further enhance the balance sheet and also could provide capital to continue to accelerate growth going forward in 2019.
Investors receive a 1.05% dividend. Merrill Lynch has a huge $65 price target, while the consensus target is $50.67. The stock ended Thursday at $30.62.
This stock has been on fire over the past six weeks but still trades about 10% below the March 9, 2009, close. Mosaic Co. (NYSE: MOS) is a $9 billion in sales fertilizer producer that is the world’s largest integrated producer of phosphate (11% share) and the third largest global producer of potash (15% share).
Mosaic markets its North-American based production throughout the world with distribution assets in 11 countries. The company was created by the October 22, 2004, merger of IMC Global and Cargill Crop Nutrition. Mosaic also has phosphate production joint ventures in Brazil, China and, most recently, Saudi Arabia.
Investors are paid a puny 0.28% dividend. Merrill Lynch has set a price objective of $42. The consensus target is $38.68, and shares were last seen at $36.14.
This is one of the largest mining companies, and its stock is a solid buy for more conservative accounts. Newmont Mining Corp. (NYSE: NEM) is a leading gold and copper producer. It employs approximately 29,000 employees and contractors, with the majority working at managed operations in the United States, Australia, Ghana, Peru, Indonesia and Suriname. Newmont is the only gold producer listed in the S&P 500 index.
Last year Newmont announced that “first gold” has been poured at its new mine, called the Merian gold mine, in Suriname in South America. It reported Merian contains gold reserves of 5.1 million ounces and that annual production is expected to average between 400,000 and 500,000 ounces of gold at competitive costs during the first five full years of production.
Newmont has indicated that it could increase the dividend this year by at least 50%. Merrill Lynch feels the miner has sufficient free cash flow to pay higher dividends and continue reducing debt and investing in projects. The stock is down almost 16% from the close on March 9 of 2009.
Shareholders receive a 1.7% dividend. The $41.50 Merrill Lynch price objective compares with a $40.75 consensus estimate. Shares closed most recently at $32.86.
Shares of these four very good companies still trade lower than when the market bottomed in 2009. While certainly not momentum plays, they are somewhat out of favor and could provide good value in what is still a very rich market going forward.