Gurufocus: Buffett's cheapest stocks

Low P/E Warren Buffett Stocks: Ingersoll-Rand Company Ltd., Gannet Co. Inc., UnitedHealth Group Inc., Wells Fargo Co., and SunTrust Banks Inc.
Posted by: gurufocus (IP Logged)
Date: June 26, 2008 05:27PM
Stock market had a big down day. Are you fearful? If you are, maybe it is time to get greedy. Buy good companies at undervalued prices provides best rewards for long term investors. These are some of Warren Buffett stocks that are at very low P/E ratios. It might be a good place to start. Warren Buffet is arguably the most respected and successful investor in history. Following a value investing strategy that is an adaptation of Benjamin Graham’s approach, his investment strategy of discipline, patience and value consistently outperforms the market and thousands of investors worldwide follow his moves. Ingersoll-Rand Company Ltd., Gannet Co. Inc., UnitedHealth Group Inc., Wells Fargo Co., and SunTrust Banks Inc. are only some of the companies that he has chosen to invest in. Ingersoll-Rand Company Ltd. (IR) Ingersoll-Rand Company Limited, is a large and diversified industrial technology company that provides it's services both in the United States and internationally. Its products include Ingersoll Rand industrial equipment, Hussmann refrigeration equipment, Club Car golf carts, and Trane air conditioning services. In recent headlines, the company experienced a recent shake up in its executive team, and is reported as one of few companies that has been paying dividends without interruption for the last 50 years. Warren Buffet has owned shares of Ingersoll since the third quarter of 2007 and he just recently increased his position in IR as the number of shares increased from 636,600 in 2007 to 936,600 shares as of March 31, 2008 , an increase of 47.13% from the previous quarter. This position accounts for 0.06% of the $66.46 billion portfolio of Berkshire Hathaway, valued at $41.7 million at the end of the first quarter of 2008. Mason Hawkins has also increased his position while Glenn Greenberg and Michael Price both initiated positions in Ingersoll-Rand. Kenneth Fisher, NWQ Managers and Dodge & Cox remained steady in their share ownership. On the other hand, both John Keeley and Richard Snow decreased their positions. As recently as June, there has been activity within IR with regards to their shares. Director Gary D Forsee bought 1,000 shares of IR stock in mid-May at the average price of $46.42, the price of the stock has decreased by 14.35% since then. In contrast, Director Richard J Swift sold 9,000 shares of IR stock in early June at the average price of $43.89 and the price of the stock has since decreased by 9.41%. Finally, Director Tony L White sold 4,500 shares of IR stock in early May at the average price of $43.27 but since then the price of the stock has decreased by 8.11%. IngersollRand Company Ltd. has a market cap of $10.85 billion; its shares were traded at around $37.07 with a P/E ratio of 3.20 and P/S ratio of 1.18. The dividend yield of Ingersoll-Rand Company Ltd. stocks is 1.7%. Gannett Co. Inc. (GCI) Gannett Co., Inc. is a leading international news and information company that operates both in the United State and the United Kingdom . In the United States , the company publishes 85 daily newspapers, including USA TODAY, one of the most popular sites on the web, and nearly 900 non-daily publications. Along with each of its daily newspapers, the company operates Internet sites offering news and advertising. Gannett operates in two segments, Newspaper Publishing and Broadcasting and has a market cap of $5.85 billion; its shares were traded at around $21.96 with a P/E ratio of 6.2 and a P/S ratio of 0.81. The dividend yield of Gannett Co. Inc. stocks is 6.2%. Recently, the newspaper industry has experienced a consistent decline as advertising sales trail the slumping economy and the overall industry revenue is down 12 percent this year, on top of 2007's 8 percent drop. Gannet Co. Inc. has also felt the deceleration in the industry as it is down 55 percent in the last twelve months, a 13 year low for the company. Warren Buffet has had shares in Gannet since the second quarter of 2000, owning 3,636,800 shares in 2000 and 3,447,600 shares in 2008. His number of shares decreased after the third quarter of 2003 when the stocks were at their highest value of $304.7 million at a price of $88.14 per share. Although the value of the stock has decreased steadily since 2003 to a value of $100.2 million, Warren Buffet has remained unchanged in his ownership. In his recent interviews and shareholder meetings, Warren Buffett indicated that the era of newspapers has passed and that traditional news mediums are being interrupted by the internet. John Rogers and Brian Rogers have both increased their shares in Gannet Co. Inc. while Charles Brandes, NWQ Managers, and Arnold Van Den Berg have followed the footsteps of Warren Buffet and kept slightly adjusted or unchanged positions in Gannet. On the other hand, Davis Dreman sold shares to decrease his position with the company and Jean-Marie Eveillard sold out his holdings after the first quarter of 2008. Senior VP & Chief Digital Officer Christopher D Saridakis bought 5,000 shares of GCI stock on April 23, 2008 , at the average price of $25.55; the price of the stock has increased by 0.08% since. UnitedHealth Group Inc. (UNH) UnitedHealth Group Incorporated provides healthcare services in the United States to individuals, families, seniors, and businesses. The company's Health Care Services segment offers consumer-oriented health benefit plans and services plus administrative and other management services to customers. UnitedHealth Group Inc. has a market cap of $36.86 billion; its shares were traded at around $26 with a P/E ratio of 7.7 and P/S ratio of 0.48. The dividend yield of UnitedHealth Group Inc. stocks is 0.1%. Recently, Ron Muhlenkamp has lowered his holdings in UNH, his firm's largest holding at the end of the first quarter of 2008. Reuters reports that a recent bill that that was voted on in the U.S. House also impacts UNH as it proposes budget cuts to health companies which hold private health plans that contract with the government for patients on Medicare. Warren Buffet’s holdings in UNH have gone from 1,021,400 shares at the end of 2006 to 6,400,000 shares in 2008. The value of the stock has risen from $47.6 million at the end of 2006 to a high of $349.2 million at the end of 2007 Like Warren Buffet, most Gurus that own UNH have kept their shares of stock unchanged or only slightly adjusted, including Chris Davis, Edward Owens, George Soros, Dodge & Cox, Wallace Weitz, Kenneth Fisher, Glenn Greenberg, Ronald Muhlenkamp, David Dreman, and Bill Miller. In contrast, Robert Olstein and Ron Baron sold out their holdings in the quarter that ended on March 31, 2008 . Both Director Michele J Hooper and EVP, Human Capital Lori Sweere bought shares of UNH stock recently while Director Richard T Burke, Director James A /dc/ Johnson, and Director Thomas H Kean have recently sold shares of UNH stock. The price of UNH stock has decreased by an average of 9% since the start of the third quarter in 2008. Wells Fargo Co. (WFC) Wells Fargo & Company is a large and successful financial institution in the United States that provides banking, investment, insurance and mortgage services. It operates in three segments: Community Banking, Wholesale Banking, and Wells Fargo Financial. Wells Fargo & Company has a market cap of $83.89 billion; its shares were traded at around $24.07 with a P/E ratio of 10.38 and P/S ratio of 2.54. The dividend yield of Wells Fargo & Company stocks is 4.8%. Although recently small banks are predicted to experience a downward slump in the market, larger banks, such as Wells Fargo, are said to be reasonably secure, according to Business Week. Yahoo! Finance reports however, that despite the security Wells Fargo & Co. spent $640,000 in the first quarter to lobby on credit card regulation and mortgage reform, among other issues. Warren Buffet has had shares in Wells Fargo Co. since 2001, owning 110,142,760 shares in 2000 and 290,654,868 shares in 2008. His number of shares has increased steadily even as the value of the stock has decreased after reaching their highest value of $9.9 billion at a price of $35.62 per share in 2007 to $8.5 billion at a price of $29.10 per share in 2008. While Warren Buffet’s holdings have remained relatively unchanged, similar to Chris Davis, David Dreman, Kenneth Fisher, Tweeney Browne, Ruane Cunniff, NWQ Managers, Chuck Akre, and Arnold Van Den Berg, stock guru Richard Snow just initiated his holdings in the company. Brian Rogers, Dodge & Cox, Ron Baron, and George Soros however, chose to increase their positions while Wallace Weitz and Ken Heebner chose to decrease their positions. Both President & CEO, Director John G Stumpf and Director Richard M Kovacevich bought shares of WFC stock despite a recent decline in value. SunTrust Banks Inc. (STI) SunTrust Banks, Inc. is a diversified financial services company that provides personal finance, business banking, and institutional financial services to various to consumer and corporate customers in the United States . SunTrust Banks Inc. has a market cap of $14.26 billion; its shares were traded at around $37 with a P/E ratio of 9.43 and P/S ratio of 2.30. The dividend yield of SunTrust Banks Inc. stocks is 7%. Smaller banks are predicted to face a more difficult year this year due to the national economic downturn and SunTrust Banks Inc. is no exception. It has dropped 29.7 percent within the last four weeks. Warren Buffet has been a long term holder of SunTrust Banks, Inc. Currently, Warren Buffett owns 3,204,600 shares of STI as the first quarter of 2008 a number which accounts for 0.27% of the $66.46 billion portfolio of Berkshire Hathaway. Like Warren Buffet, Brian Rogers, David Dreman, Chris Davis, Kenneth Fisher, Dodge & Cox and Ruane Cunniff all kept steady shares in STI. Recently, Corp. EVP and CFO Mark A Chancy bought shares of STI stock while Chairman William R Jr Reed sold his shares while prices were declining.