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 News

    What You Can Learn from Carl Icahn's Mistakes

    Carl Icahn has been a stellar performer in the investment world for decades, but following his lead these days could be dangerous.
  2. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  3. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  4. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  5. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  6. Investing News

    Chipotle Served with Criminal Probe

    Chipotle's beat muted expectations and got a clear bill from the CDC, but it now appears that an investigation into its E.coli breakout has expanded.
  7. Stock Analysis

    Analyzing Sprint Corp's Return on Equity (ROE) (S)

    Learn about Sprint's return on equity. Find out why its ROE is negative and how asset turnover and financial leverage impact ROE relative to Sprint's peers.
  8. Stock Analysis

    Why Alphabet is the Best of the 'FANGs' for 2016

    Alphabet just impressed the street, but is it the best FANG stock?
  9. Investing News

    A 2016 Outlook: What January 2009 Can Teach Us

    January 2009 and January 2016 were similar from an investment standpoint, but from a forward-looking perspective, they were very different.
  10. Mutual Funds & ETFs

    3 Vanguard Equity Fund Underperformers

    Discover three funds from Vanguard Group that consistently underperform their indexes. Learn how consistent most Vanguard low-fee funds are at matching their indexes.
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 >>
COMPANIES IN THIS ARTICLE
Trading Center