Is There Any Value Left?

Mr. Market has been a happy fellow over the past two months, thanks to Federal Government indicating that there could a possibly second round of quantitative easing. Stocks have been climbing higher, despite the economic fundamentals on the belief that the Fed will step in with the printing press. Quantitative easing or not, there are still opportunities, albeit they are not as attractive as they may have been back in August.

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Realistic Assumptions
As painful as it may be, the best time to buy stocks is during periods of chaos. It's as simple as that. However, it's very hard to actually implement, since many investors are overcome by emotion versus rationality. So when looking at stocks today, realize that the multi-baggers may be an extinct species at these valuations, but going forward, names still exist that offer an attractive return profile versus that of the market. With that realistic assumption, some of the better opportunities are found in the names known by many.

Yielding nearly 9%, Mr. Market is clearly not confident in the future of the dividend at telecommunications company Frontier Communications (NYSE:FTR) but the yield continues to get paid. And it's not an aberration in the industry. AT&T (NYSE:T) yields 5.9% while Verizon Communications (NYSE:VZ) yields 6%.

Value from Growth
Wonder Auto Technology (NYSE:WATG) provides starters, alternators, engine valves and tappets in the People's Republic of China, South Korea and Brazil primarily for passenger and commercial automobiles. The company is based in China and trades for under eight-times forward earnings and has a healthy balance sheet with minimal net debt. Sales are growing at a healthy clip, although it's wise to exercise a little extra caution when dealing with investments outside the U.S.

Universal Insurance Holdings (NYSE:UVE) is a property and casualty insurer operating primarily in Florida, though the company has expanded to service other states. The company sports a market cap of $180 million and at $4.60 a share, trades at a premium to book value, at 1.55 times. The current 10-cent quarterly dividend represents a yield of nearly 9% at current prices, but the dividend was reduced from the prior year.

The Bottom Line
Since price paid determines value received, today's stock price tags are offering less value than they did before September's rally. But amidst all the shuffle, there are always opportunities for the diligent, patient investor. (For more stock ideas, check out Big Ideas From Value Investing Congress.)