March 28, 2016

A Snapshot of the 6 Cheapest Megacap Stocks

Out of five dozen publicly traded companies with valuations in excess of $100 billion, only these six bear single-digit forward P/Es -- but are these companies really as cheap as they appear?


Investors have experienced quite the rollercoaster ride in 2016. Volatility is always present in the stock market to some degree, but the near-immediate 10% plunge in all three major U.S. indexes that began the year, and the ferocious three-week rally that's in effect eliminated the majority of those early year losses, probably have investors wondering what's next.

To calm investors' jitters, we've been looking at a myriad of ways large-cap and megacap stocks (those with valuations in excess of $100 billion) can be used to provide stability, and often income, for investors. We've examined companies with strong records of cash flow, and we've also looked at businesses sitting on veritable boatloads of cash. What we've not done yet is look at megacap stocks that look downright cheap.

The cheapest megacap stocks
What's considered cheap? Well, that's completely arbitrary since certain industries naturally trade at lower price-to-earnings multiples (the most common measure of a publicly traded company's "value") than others. But for the sake of argument, we'll only consider companies trading at forward P/Es of less than 10.

As of last Monday's close (March 21), there were 60 publicly traded stocks sporting valuations in excess of $100 billion. However, just six of these megacap companies offer investors the chance to be partial owners of businesses with single-digit forward P/Es. Here's a snapshot of all six companies...



Source: The Motley Fool