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Gurus Are Buying These Low P/S Stocks

- By Tiziano Frateschi

According to GuruFocus' All-in-One Screener, the following are stocks with market caps above $5 billion and are trading with low price-sales (P/S) ratios.

T-Mobile US Inc. (TMUS) is trading at about $50 with a P/S ratio of 1.17 and an estimated price-earnings (P/E) multiple of 31.43. The company has a market cap of $40.67 billion; the stock has dropped by 10% over the last 10 years. During the last 52 weeks, the price has been as high as $51.65 and as low as $33.23.


It provides wireless communication services in the postpaid, prepaid and wholesale markets. The company's products and services include voice, messaging, data services, wireless devices, smartphones and other mobile communication devices.

The DCF model gives a fair value of $16.8, making the stock overpriced by 194%. The Peter Lynch earnings line suggests the stock is less overpriced, giving a fair price of $23.6.

The largest shareholder among the gurus is Andreas Halvorsen (Trades, Portfolio) with 1.69% of outstanding shares followed by First Eagle Investment (Trades, Portfolio) with 0.12%, John Paulson (Trades, Portfolio) with 0.12%, Jim Simons (Trades, Portfolio) with 0.1%, John Burbank (Trades, Portfolio) with 0.06%, Larry Robbins (Trades, Portfolio) with 0.06% and Mario Gabelli (Trades, Portfolio) with 0.06%.

The Travelers Companies Inc. (TRV) is trading at about $106 with a P/S ratio of 1.19 and an estimated P/E multiple of 11.03. The company has a market cap of $30.8 billion; the stock has risen by 112% over the last 10 years. During the last 52 weeks, the price has been as high as $119.32 and as low as $101.23.

Travelers Companies through its subsidiaries provides commercial and personal property and casualty insurance products and services to businesses, government units, associations and individuals.

The DCF model gives a fair value of $183.44, making the stock undervalued with a margin of safety of 41%. The Peter Lynch earnings line suggests the stock is less undervalued, giving a fair price of $147.4.

Jeremy Grantham (Trades, Portfolio) is the largest shareholder among the gurus with 0.82% of outstanding shares followed by Pioneer Investments (Trades, Portfolio) with 0.34%, Mairs and Power (Trades, Portfolio) with 0.2%, Barrow, Hanley, Mewhinney & Strauss with 0.15%, Tom Gayner (Trades, Portfolio) with 0.11%, PRIMECAP Management (Trades, Portfolio) with 0.08% and Dodge & Cox with 0.07%.

LyondellBasell Industries NV (LYB) is trading at about $78 with a P/S ratio of 1.24 and an estimated P/E multiple of 8.64. The company has a market cap of $33.37 billion; the stock has risen by 265% over the last 10 years. During the last 52 weeks, the price has been as high as $97.20 and as low as $69.10.

It is a plastics, chemical and refining company that produces polypropylene and polypropylene compounds, propylene oxide, polyethylene, ethylene and propylene. It also provides technology licenses.

The DCF model gives a fair value of $99.53, making the stock undervalued with a margin of safety of 19%. The Peter Lynch earnings line suggests the stock is more undervalued, giving a fair price of $139.5.

The largest shareholder among the gurus is Grantham with 0.36% of outstanding shares followed by Barrow, Hanley, Mewhinney & Strauss with 0.27% and First Eagle Investment (Trades, Portfolio) with 0.25%.

Vale SA ADR (VALE) is trading at about $7 with a P/S ratio of 1.24 and an estimated forward P/E multiple of 87.72. The company has a market cap of $35.56 billion; the stock has dropped by 47% over the last 10 years. During the last 52 weeks, the price has been as high as $7.05 and as low as $2.13.

It is a metals and mining company that produces and supplies iron ore, iron ore pellets, nickel, manganese ore, ferroalloys, copper, coal, phosphates, potash, cobalt and others.

Simons is the largest shareholder among the gurus with 0.29% of outstanding shares followed by Ken Heebner (Trades, Portfolio) with 0.14%, Ray Dalio (Trades, Portfolio) with 0.03% and Howard Marks (Trades, Portfolio) with 0.01%.

Southwest Airlines Co. (LUV) is trading at about $40 with a P/S ratio of 1.25 and an estimated P/E multiple of 11.16. The company has a market cap of $24.3 billion; the stock has risen by 162% over the last 10 years. During the last 52 weeks, the price has been as high as $51.34 and as low as $33.96.

The company is an operator of a passenger airline that provides scheduled air transportation in the U.S. and international markets.

The DCF model gives a fair value of $43.22, making the stock undervalued with a margin of safety of 9%. The Peter Lynch earnings line suggests the stock is more undervalued, giving a fair price of $52.6.

The largest shareholder among the gurus is PRIMECAP Management (Trades, Portfolio) with 11.83% of outstanding shares followed by Barrow, Hanley, Mewhinney & Strauss with 0.58%, David Tepper (Trades, Portfolio) with 0.56%, T Rowe Price Equity Income Fund (Trades, Portfolio) with 0.27%, Joel Greenblatt (Trades, Portfolio) with 0.14% and Simons with 0.12%.

W.W. Grainger Inc. (GWW) is trading at about $204 with a P/S ratio of 1.31 and an estimated forward P/E multiple of 18.67. The company has a market cap of $12.59 billion; the stock has risen by 186% over the last 10 years. During the last 52 weeks, the price has been as high as $239.95 and as low as $176.85.

The company is a distributor of maintenance, repair and operating supplies and other related products and services used by businesses and institutions in the U.S. and Canada with expanding operations.

The DCF model gives a fair value of $216.64, making the stock undervalued with a margin of safety of 4%. The Peter Lynch earnings line suggests the stock is overpriced, giving a fair price of $167.4.

First Eagle Investment (Trades, Portfolio) is the largest shareholder among the gurus with 3% of outstanding shares followed by Grantham with 0.31%, Greenblatt with 0.09%, Meridian Funds (Trades, Portfolio) with 0.05%, Simons with 0.04%, Chuck Royce (Trades, Portfolio) with 0.04% and Dalio with 0.02%.

Disclosure: I do not own any shares of any stocks mentioned in this article.

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This article first appeared on GuruFocus.