With almost 25 stocks in the S&P 500 that have triple-digit price tags, which should investors own going forward? David Dietze, president and chief investment strategist at Point View Financial Services and David Sowerby, chief market analyst and portfolio manager at Loomis Sayles & Co. shared their best plays.
Goldman Sachs —“Here’s a company that’s about $161 a share and the good news is, that’s only one-third off of its all-time high price a couple of years ago,” Dietze told CNBC. “It’s one of the premier financial institutions on the planet and it’s trading at very low multiple of earnings to book value relative to the market and to its history.”
IBM —“They are trading at all time highs, but multiple of earnings and cash flow is trading at a discount to the market,” he said of the firm. “About half of its business is now service revenue, they have steady recurring cash flow and it’s not as cyclical as being dependent on a single piece of hardware or software.”
Franklin Resources—“[The firm] trades at 15 times forward earnings, it’s seeing impressive organic growth,” said Sowerby.
Priceline.com —“The valuation is a bit expensive, however, with 70 percent of their growth coming internationally, there is more of a need for Priceline services,” he said.
Apple —“Despite the fact that the stock has done so well relative to 5-year average, Apple is still trading at about a 20 percent discount on its P/E to its 5-year average and if you look at the free cash flow yield that Apple is generating, it still makes Apple a compelling story in the tech space,” he said of the firm.
Scorecard—What They Said:
- Dietze's Previous Appearance on CNBC (Nov. 30, 2010)
- Sowerby's Previous Appearance on CNBC (Nov. 29, 2010)
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CNBC Data Pages:
Dietze has family members who own shares of GS. In addition, Dietze has investment banking clients who own shares of GS and IBM.
No immediate information was available for Sowerby or his firm.