Comparatively speaking, McDermott International (NYSE:MDR) is also much cheaper than many of its peers. It trades at just half the industry average price-to-book (1.1 versus 2.2) and has a forward P/E of just nine compared to a trailing P/E average of 22 for the sector. Furthermore, while many of its peers are deeply in debt, McDermott International (NYSE:MDR) is sporting $360 million in net cash.
This isn’t a question of whether McDermott can find the work (because it’s there); it’s just a matter of how quickly it puts these short-term growth inhibitors in the rearview mirror.
Looking north for opportunities
As I head north to Canada in a few days for a vacation of my own, I can’t help but think that the Canadian Imperial Bank of Commerce (USA) (NYSE:CM), known better as Canadian Imperial Bank of Commerce (USA) (NYSE:CM), is getting a bad rap from shareholders in recent months, despite being one of Canada’s most stable money center banks.
The key to its success has been in keeping its operations traditional, focusing on loan and deposit growth, as well as wealth management, to grow its bottom line. In its latest quarter, traditional retail and business banking revenue rose a modest 2%, but profits saw a nice boost from a 14% reduction in loan-loss provisions as credit quality improved on outstanding loans.
However, wealth management was the real bright spot, delivering 16% net income growth as the bank garnered more assets under management, and as more clients purchased long-term mutual funds. Furthermore, Canadian Imperial Bank of Commerce (USA) (NYSE:CM)’s Tier 1 common ratio came in at a healthy 12.2%, which is higher than many of its Canadian counterparts.
The real star here, though, might be Canadian Imperial Bank of Commerce (USA) (NYSE:CM)’s dividend, which, among Canada’s six large banks, is the cream of the crop at a yield of 5%. Put another way, if Canadian Imperial Bank of Commerce (USA) (NYSE:CM)’s share price remained stagnant and all you did was reinvest the dividends, you’d double your money in less than 15 years! Although Canadian Imperial Bank of Commerce (USA) (NYSE:CM)’s quarterly payouts can be erratic, its average quarterly stipend is more than three times what it used to pay out a decade ago. Best of all, the payout ratio is still less than 50% of projected EPS this year, leaving further room to move even higher.
With its ample liquidity, a solid dividend, and a focus on core banking, CIBC is a name you should have a close eye on.
Foolish roundup
This week’s theme is also about reassessing our expectations. Pepco Holdings, Inc. (NYSE:POM), McDermott, and CIBC have all had their fair share of problems in the past, but each boasts identifiable catalysts and valuation advantages over their peers that make them intriguing buy options moving forward.
I’m so confident that these three names will bounce off their lows that I’m going to make a CAPScall of outperform on each one.
The article 3 Stocks Near 52-Week Lows Worth Buying originally appeared on Fool.com is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
