The company has already made a foray into the mobile market, albeit its mobile presence has been modest at best. In recent years, the company shifted its focus to mobile applications by acquiring Infineon Technologies’ wireless chip business in 2011 and introducing phones with Intel chips in several markets, including Europe, Africa, Latin America, Russia, India and China. These measures are expected to gain more traction in the years ahead. The stock is undervalued, given its high yield and forward P/E of 10.9x, almost half that of the semiconductor industry multiple. In the third quarter of 2012, Ken Fisher and Jim Simons marginally increased their large stakes in INTC, while Jean-Marie Eveillard and Paul Ruddock reduced their positions.
United Parcel Service, Inc. (NYSE:UPS)., a package delivery company, has a dividend yield of 2.9%, a payout ratio of 45% of the current-year EPS estimate, and five-year annualized dividend growth of 4.1%. The company recently reported earnings that missed analyst expectations. It also guided 2013 EPS below consensus, with 2013 adjusted EPS of between $4.80 and $5.06, an increase of 6%-to-12% over 2012, but below the analyst projections of $5.13 per share. The company’s EPS estimates have thus been revised downward. However, despite the missed expectations, the company’s forecasted EPS growth is still robust given the relatively weak economic backdrop (UPS sees 2.0% growth in the U.S. economy and 2.5% globally). As the U.S. economy picks up pace in the second half of this year, the UPS estimates could move higher. In general, analysts expect the company to grow its EPS at a long-term CAGR of 10.3%. Trading at 15.7x forward earnings, slightly below its industry multiple of 16.0x, the stock is priced well below its five-year P/E multiple. However, it looks expensive based on a price-to-book of 10.1 versus the industry’s 4.6 and its own five-year average of 8.8. In the third quarter last year, Greenhaven Associate’s Edgar Wachenheim held more than $280 million in the stock.
Norfolk Southern Corp. (NYSE:NSC), a rail transportation company, has a dividend yield of 2.9%, a payout ratio of 36% of the current-year EPS estimate, and five-year annualized dividend growth of 13.5%. The company has raised dividends for 11 consecutive years. It is one of a few companies that have raised dividends by more than 10% annually over at least the past 10 years. The prospects for continued robust dividend growth are good, given that analysts expect NSC’s long-term EPS growth to average 10.3% annually. Still, the company posted a 3% decline in fourth-quarter 2012 revenues, driven by a 13% decline in coal shipment volumes. Intermodal traffic was up 4% year-over-year and merchandise traffic grew 1% over the previous year. Still, the outlook for coal shipments is unlikely to improve this year, according to industry sources, as reported in The State Journal.
However, continued growth is expected in the intermodal traffic and merchandise traffic, the latter being driven by the automotive, chemicals, and farm industry growth. Norfolk Southern’s stock repurchase program is also buttressing its EPS growth. The stock is trading at 12.5x forward earnings, below its industry’s 14.5x. It also has a below-industry price-to-book, price-to-sales, and price-to-cash flow ratios. Its PEG is 1.1. Fund managers Bill Miller (Legg Mason Capital), D. E. Shaw, and Daniel Bubis (Tetrem Capital) all reduced their holdings in NSC in the third quarter of last year. In contrast, Cliff Asness increased his stake.
The article 5 Dividend Stocks from Alpha-Generating All Cap Value Fund originally appeared on Fool.com and is written by Jake Mann.
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