One of the most forgotten axioms in investing is that price is what you pay, but value is what you get. Stated differently, the money you make on an asset transaction is made at the time of purchase, you just don't know it until you sell. Thanks to a 10% sell off in the United States equity markets in May, the list of stocks hitting new lows has expanded. While one has to be careful navigating stocks in an arena of falling prices, some interesting names stick out.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

Looking Globally
With all eyes focusing on Europe, and whether or not it can contain its economy and financial system from a total meltdown, European stocks are getting hammered much in the same way that U.S. equities did back in 2008 and 2009. Opportunistic investors were rewarded for buying U.S. equities back then. Buying in Europe could have the same results.

Oil giant BP (NYSE:BP) now trades for $36.59 and pays out a dividend of 5.2%. While the company is still sorting out its ultimate liability from the Gulf oil spill, the company generates a lot of cash flow. Like other major oil companies that have faced similar accidents, BP is a giant in the industry and will continue to be so. In the meantime, investors are getting the highest dividend payout amongst the oil majors and paying less than five times earnings to do so while they wait. BP's valuation is nearly half of Exxon Mobil's (NYSE:XOM) valuation, yet BP's dividend yield is almost twice as much.

SEE: Valuing A Stock With Supernormal Dividend Growth Rates

Healthy Stocks on Sale
Back here in the U.S., concerns over Europe have sent fears throughout the stock market. So much so, that healthy quality businesses like Walgreen (NYSE:WAG) is trading at a 52-week low and yielding 3%. Trading at 10 times earnings, Walgreen shares are depressed over a lawsuit with Express Scripts. This week, both companies announced to end that lawsuit. Compared to rival CVS Caremark (NYSE:CVS), Walgreen trades at a significant discount for an equally excellent business. CVS shares trade for 17 times earnings and yields 1.5%. Now with the lawsuit dropped, Walgreen is trading at a significant discount to its future growth potential. Americans are getting older and need convenient, easy to shop drugstores like Walgreen and CVS.

SEE: Litigation: Are Your Investments At Risk?

The Bottom Line
Shares in high quality businesses are finding themselves in the bargain bin as a result of investors overreacting at the first sign of bad news. Undoubtedly, the global macro environment is amplifying the reaction and that is creating favorable prices for value seeking investors.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Sham Gad did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Investing

    Build a Retirement Portfolio for a Different World

    When it comes to retirement rules of thumb, the financial industry is experiencing new guidelines and the new rules for navigating retirement.
  2. Stock Analysis

    Net Neutrality: Pros and Cons

    The fight over net neutrality has become an amazing spectacle. But at its core, it's yet another skirmish in cable television's war to remain relevant.
  3. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  4. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  5. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  7. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  8. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  9. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
  10. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Fast Fashion

    Definition of "fast fashion."
  3. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  4. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  5. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  6. Ltd. (Limited)

    An abbreviation of "limited," Ltd. is a suffix that ...
RELATED FAQS
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!