Valuation Analysis of Every Single Stock in S&P 500

Valuation Analysis of Every Single Stock in S&P 500


Whenever there is a rise in stock values as we have experienced over the past year or so, it seems to be human nature to automatically assume that valuations have become too high.  However, although it is possible that this is true, it is not necessarily so.  A lot has to do with where valuations were before the run-up occurred.  For example, if valuations were extremely low, then even after a rise, they can continue to be low or perhaps only have risen to becoming fairly valued.

On the other hand, if valuations were already extended prior to the run, then current valuations may have become dangerously high. The important point here is that valuation is a very relative concept.  Moreover, we would argue that valuation needs to be evaluated on a company-by-company basis.  This is simply an extension to the concept that it is a market of stocks, rather than a stock market, that we introduced in our last article found here.

A Good Run Broadly Based

The following graph, courtesy of the leading financial blog, Seeking Alpha, clearly illustrates just how good and how broad recent stock price rises have been.  We suggest the reader focus on the one year, and year-to-date numbers first and foremost.  However, the last three months are impressive as well.

This next graphic, once again courtesy of Seeking Alpha, breaks the recent rise in stock prices more specifically by sector.  Once again, we discover that even amongst a lot of reporting of doom and gloom, and even considering several dire forecasts that stock markets were set to collapse, recent performance has been rather strong. Therefore, we feel safe in stating that we have actually been in a bull market over the last year or so.

On the other hand, and to stay true to our thesis that it is a market of stocks and not a stock market, we offer the following qualifier.  It has been our experience that in every market, whether it is a bull market or a bear market, there will always be individual stocks that are overvalued, undervalued or fairly valued. Therefore, it’s up to the individual investor to put in the effort and to do the necessary work to find them.

Common sense would tell us that there will be more overvalued individual stocks in a bull market, and conversely, there will be more undervalued stocks in the bear market.  Nevertheless, we contend that the discerning investor willing to do his or her homework can find good value in any market environment. This recent bull market is no different, as we will demonstrate later in this article. Note that this perspective is in addition to what we offered in our introductory remarks.

Mining the S&P 500 for Value

Even though the S&P 500 is comprised of 500 individual stocks, thanks to the FAST Graphs™ research tool, it is a rather easy matter to review each constituent of this large universe one company at a time.  In fact, that is precisely what I did.  Since the S&P 500 is preloaded with my premium subscription, I am able to easily review the entire index as a whole, and I have several options on ways to organize the list, for example, by dividend yield, alphabetically, by total return, etc.

Accordingly, I started with reviewing the index in alphabetical order, then I ran the group by estimated total return to provide a perspective of valuation, and then by dividend yield order. This aggregate portfolio review allowed me to ascertain a good feel for the relative valuation of the index as a whole. But even better than that, since it was based on a review of each of the component parts, my insights were greatly enhanced because I went through each individual graph on all 500 constituents one at a time.

Again, thanks to the efficiency of the FAST Graphs™ research tool, this was a relatively easy task that I was able to accomplish in approximately one hour. To me, the result was nothing short of amazing.  Once I completed this exercise, my perspective and feeling of the relative valuation of the S&P 500 as an index, but based on reviewing each individual company, resulted in what I felt was a much deeper understanding than any mere review of statistics could ever have provided me.

Moreover, what I discovered supports my general thesis previously stated above “that in every market, whether it is a bull market or a bear market, there will always be individual stocks that are overvalued, undervalued or fairly valued.” By carefully dissecting the S&P 500 one company at a time, I was able to find all of the above. The remainder of this article will provide sample examples of undervalued, overvalued and fairly valued companies on several different categories of stocks that are in the S&P 500.

It is important to state in advance that what follows is not intended to be a comprehensive list.  Instead, we are simply offering a few examples to illustrate the validity of the concept that it is a market of stocks.  However, an additional benefit to this exercise is the vivid illustration that companies come in all different sizes, shapes and flavors.  Furthermore, although we will focus primarily on examples of various categories of companies that appear to be in value, we will include a few overvalued examples for perspective at the end.

(Note: For the reader’s information and convenience, follow this link to a FAST Graphs™ portfolio review of the complete list of the S&P 500 constituents and key fundamental metrics presented in order of highest total estimated return to lowest based on current valuation and estimates of future growth. The results may astound you.)

Fairly Valued S&P 500 Dividend Growth Stocks

Three examples of fairly valued and or undervalued S&P 500 dividend growth stocks would include, but is not limited to Hasbro, Inc. (NASDAQ:HAS), AFLAC Incorporated (NYSE:AFL) and Microsoft Corporation (NASDAQ:MSFT). Since a picture is worth 1000 words we offer the following historical and forecasting graphs on Hasbro Inc.

Hasbro Inc – Directly from their website:

“Hasbro is a branded play company providing children and families around the world with a wide-range of immersive entertainment offerings based on the Company’s world class brand portfolio. From toys and games, to television programming, motion pictures, digital gaming and a comprehensive licensing program, Hasbro strives to delight its global customers with well-known and beloved brands such as TRANSFORMERS, LITTLEST PET SHOP, NERF, PLAYSKOOL, MY LITTLE PONY, G.I. JOE, MAGIC: THE GATHERING and MONOPOLY. The Company’s Hasbro Studios develops and produces television programming for markets around the world. The Hub TV Network is part of a multi-platform joint venture between Hasbro and Discovery Communications (NASDAQ: DISCA, DISCB, DISCK), in the U.S. Through the Company’s deep commitment to corporate social responsibility, including philanthropy, Hasbro is helping to build a safe and sustainable world for