Barron's recently published its annual list of the 500 top U.S. and Canadian companies based on sales growth, cash flow, and return on investment, delivering juicy choices for investors on the hunt for stocks to buy.
Apple Inc. (Nasdaq: AAPL) took the top spot, with Wesco International (NYSE: WCC) snagging second. Western Digital Corp (Nasdaq: WDC) grabbed No. 3. and DaVita HealthCare Partners Inc. (NYSE: DVA) was No. 4. C.H. Robinson Worldwide Inc. (Nasdaq: CHRW) rounded out the top five.
Landing a spot on the coveted roster is indeed an accomplishment. But it hasn't always been a reliable judge of how a company's shares will perform in the future.
So, for the second consecutive year, Barron's teamed with financial data and software company FactSet Research Systems Inc. to find the cheapest stocks among its 500 list. FactSet used price/earnings ratios based on earnings estimates for each company's current fiscal year.
Last year's "cheap" list of 30, tracked for a year, averaged a 42% return over the period ended April 26. That's nearly triple the 15.6% gain over the same period for the Standard & Poor's 500 Index.
This year's bargains are a mixed lot. Here's a closer look at the lowest priced stocks to buy among the Barron's 500.
Stocks to Buy: Cheapest Plays in Barron's 500
Refiners: This year's list is again peppered with refiners.
Overall, the group slumped the last few months over worries that potentially stricter regulations would damage profit margins. The White House proposed reducing the amount of sulfur in gasoline and raising auto emission standards. If passed, refiners would eat most of the costs to adhere to the new standard, set to take effect in 2017.
Barron's notes the sector selloff looks done. Moreover, these refiners are profitable, inexpensive and pay attractive dividends.
Here's a handful to consider when looking for energy-related stocks to buy:
- PBR Energy Inc. (NYSE: PBR)
- Western Refining Inc. (NYSE: WNR)
- Holly Frontier Corp. ( NYSE: HFC)
- Valero Energy Corp. (NYSE: VLO)
- Marathon Petroleum Corp. (NYSE: MPC)
- Phillips 66 (NYSE: PSX)
- Apache Corp (NYSE: APA)
- Aegean Marine Petroleum Network Inc (NYSE: ANW)
- Deltek US Holdings Inc (NYSE: DK)
Financials: Since the financial meltdown of 2008, financials have turned in a mixed showing. Year-to-date, the sector has logged a 45.25% gain thanks to strong earnings from property & casualty insurers and investment services.
Barron'sfound a few industry names that offer value:
- MetLife Inc. (NYSE: MET)
- Lincoln National Corp. (NYSE: LNC)
- Prudential Financial Inc (NYSE: PRU)
- Reinsurance Group of America (NYSE: RGA)
- Unum Group (NYSE: UNM)
Transportation: The transportation sector historically has been a good leading indicator of both the economy and the stock market. Yet as markets reached numerous milestones, transportation stocks lagged. However, this sector has become a new favorite among some bulls, including CNBC's Jim Cramer.
Two names making Barron's cut:
- Delta Air Lines Inc. (NYSE: DAL) just initiated a dividend and share buyback, rarities among U.S. carriers still clawing their way out of multi-year steep losses.
- United Continental Holdings Inc. (NYSE: UAL) formed from the merger of United Airlines and Continental Airlines.
Technology: The tech sector has also trailed markets. However, the rotation into tech as the second quarter takes off is notable. That suggests plenty of upside for the sector.
On Barron's list are:
- Western Digital Corp (NYSE: WDC)
- Seagate Technologies (NYSE: STX)
- Xerox Corp (NYSE: XRX)
- Ingram Micro Inc. (NYSE: IM)
- Jabil Circuit Inc (NYSE: JBL)
- Exelis Inc. (NYSE: XLS)
- Hewlett Packard Co (NYSE: HPQ)
- Insight Enterprises (Nasdaq: NSIT)
The rest of the bunch includes: The Goodyear Tire & Rubber Co. (Nasdaq: GT); Barrick Gold Corp (NYSE: ABX); Freeport McMoRan Copper & Gold Inc. (NYSE: FCX); RR Donnelley & Sons Inc. (RRD); Pilgrim's Pride (NYSE: PPC), and CF Industries Holdings Inc. (NYSE: CF).