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Not everything is gumdrops and roses for every stock right now, despite the indexes hitting new all-time highs.
Some large-cap names have sold off in 2017, including a couple that have hit multi-year lows.
Value Stocks Are More Than the Chart
Value investors buy stocks trading at a discount to their earnings. Therefore, earnings are the key. Are they rising or falling? Investors need to know avoid the “value trap” scenario where a stock appears cheap, but that’s because the earnings are on the decline.
I took a look at five blue chip stocks that have been in the news recently, mostly for their weak stocks.
Are These 5 Blue Chip Stocks Value Stocks?
1. General Electric (GE – Free Report) has plunged to 5-year lows. Surely, with all the bad news that’s there, including a dividend cut, there must be some value, right? However, it’s forward P/E is 17.2, which still isn’t that cheap. What does the earnings forecast reveal?
2. Macy’s (M – Free Report) is dirt cheap. It trades with a forward P/E of just 5.9. Shares are down 43% this year, however, on worries that the department stores are doomed. But are the earnings estimates really signaling the end is near?
3. Biogen (BIIB – Free Report) was weak through May and has since rallied. Shares, however, are still well under the 2015 highs. It trades with an attractive forward P/E of 14.3 but does it have the earnings growth to get the thumbs up?
4. Chipotle (CMG – Free Report) is still down over 20% year-to-date and near 5-year lows. But are the shares cheap enough, and the earnings growing fast enough, to qualify it for the coveted value stock designation?
5. Exxon Mobil (XOM – Free Report) shares are weak compared to the S&P 500. Exxon is down 11% year-to-date, but are off their 2017 lows. With crude hanging out above $50 pretty consistently, are the oil stock earnings finally showing a rebound?
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