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Companies Trading at Bargain Basement Values

Companies / Stock Market Valuations Dec 11, 2008 - 08:57 AM GMT

By: Money_and_Markets

Companies

Diamond Rated - Best Financial Markets Analysis ArticleLarry Edelson writes: I'm going to cut to the chase. No complex economic theories … no philosophy … no complicated analysis.

Just the facts and practical insight on how to grow your wealth.


Just real values … real opportunities … and real money.

So if you think the world is coming to an end … or that there's no money to be made in the markets — then don't bother reading the rest of this column.

Now, if you're still with me, check this out …

Oil Companies Are Trading As If Their Oil Reserves Are Worth As Little As 15 cents on the Dollar!

Consider …

  • Anadarko Petroleum with 2.4 billion barrels of proven oil reserves that are now trading at a mere 15 cents on the dollar when compared to the company's current market value.
  • Occidental Petroleum with over 2.8 billion barrels of oil, valued at just 33 cents on the dollar .
  • ExxonMobil whose share price currently values the company's oil reserves at just $2.54 a barrel . That's a 94% discount from the current market price of oil!

Major Oil Company Values are Dirt Cheap Compared to the Value of their Reserves!
Name & Ticker Recent Price Market Cap (billions) P/E Ratio Oil Reserves millions of barrels of oil equivalent) Market Value of Oil Reserves @ $44 oil (billions $) Based on Market Cap, Oil Effectively Valued at (cents on the dollar)
Anadarko Petroleum Corp (APC) $35.00 $16 7.18 2,431 $106,979 15 cents
Chevron Corp (CVX) $78.08 $159 6.56 10,777 $474,188 34 cents
ConocoPhillips (COP) $51.49 $76 4.22 10,560 $464,625 16 cents
Exxon Mobil Corp (XOM) $79.30 $403 8.79 21,757 $957,308 42 cents
Hess Corp (HES) $44.04 $14 4.72 1,330 $58,505 24 cents
Marathon Oil Corp (MRO) $24.82 $18 4.38 1,225 $53,900 33 cents
Occidental Petroleum Corp (OXY) $52.10 $42 5.52 2,865 $126,038 33 cents

 

Are these companies bargains?

Just based on the valuations of their oil reserves, I think they are an absolute steal. Factor in the following and they're even greater bargains …

  • Anadarko is trading at 7.18 times earnings
  • Occidental at just 5.52 times earnings
  • ExxonMobil trading at just 8.79 times earnings

Or how about ConocoPhillips … trading at just over 4 times earnings?

Do you think oil and gas companies are the only ones that are dirt-cheap right now?

Think again …

Gold Miners Are an Outright Steal, Too …

  • Goldcorp whose 43 million ounces of gold is currently valued by the market at a mere 55 cents on the dollar when compared to gold's current price.
  • Newmont Mining with over 93 million ounces of gold, valued at just 21 cents on the dollar!

Gold Companies are also Dirt Cheap
Name & Ticker Recent Price Market Cap (billions) Proven & Probable Gold Reserves (millions of ounces) Market Value of Gold Reserves @ $765 an ounce (millions of $) Market Cap of Gold Reserves Effectively Valued at (cents on the dollar)
Barrick Gold Corp (ABX) $28.14 $25 124.6 $95,319 26 cents
Freeport-McMoRan Copper & Gold Inc (FCX) $20.68 $7.78 41 $31,365 25 cents
Goldcorp Inc (GG) $25.21 $18 43 $32,895 55 cents
Kinross Gold Corp (KGC) $15.16 $9.98 46 $35,190 28 cents
Newmont Mining Corp (NEM) $32.27 $15 93 $71,145 21 cents

And it's not just energy companies and gold miners that are trading at such incredible bargain basement levels …

Almost All Natural Resource Companies Are Grossly Undervalued!

Consider the two largest in the world …

  • BHP Billiton , sitting on over $1 TRILLION worth of aluminum, tin, oil, bauxite, gold, silver, and industrial diamonds. Yet its share price is valuing those reserves at less than 12 cents on the dollar!
  • Rio Tinto , with more than $2 TRILLION of natural resources that are currently valued at less than 2 cents on the dollar , making Rio one of the best bargains on the planet, in my opinion.

Now, let's widen the scope even further, because there are a lot more companies that are dirt cheap …

Companies of all kinds from all over the world are ON SALE — trading at valuations that are less than the cash they have on hand.

Put another way, they are trading as if their profits today and earnings tomorrow don't even exist. Is that amazing, or what?

Consider …

  • The Cogo Group, serving China's wireless telecom sector, is trading at just $3.40 a share. Yet the company has almost $3.30 of cash per share … zero debt … and $.49 a share in earnings.
  • South Korea-based Namyang Dairy is another debt-free company. Plus it has a $270 million pile of cash that is 44% greater than the market value of its shares.
  • Italian-based machinery manufacturer Danieli has $1.49 billion in cash on hand, 40% more than the value of its publicly traded shares.
  • The Bank of New York Mellon has $45 billion in cash in its piggy bank, $12 billion more than its $33 billion market cap.

In fact, according to a recent Bloomberg report, there are now 2,267 companies around the world that are effectively offering their profits to the public for free!

Compare that to the low in the 2002 stock market, when according to the same Bloomberg formula, there were just 276 publicly traded companies in the world that were valued so cheaply.

Do you know what those companies' share prices did in the ensuing 12 months? They soared an average of 112%!

Bottom line: There are bargains and profits galore in these markets.

So get ready to make some real money in the weeks and months ahead.

Best wishes,

Larry

P.S. If you're not already a subscriber to my Real Wealth Report , join now. We're getting positioned for the profit opportunities of a lifetime. Don't miss them!

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .

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