Four Global Contrarian Stocks Trading Below The Value Of Their Assets
GDF Suez SA (EPA:GSZ) is a European utility company. Based on 2012 figures, 37% of GDF’s sales took place in France, 30% took place in the wider European Union and 11% took place in Belgium. Due to this heavy exposure to Europe, GDF has been sold off by investors and now looks to offer an attractive risk/reward ratio. Aside from its European operations, GDF Suez SA (EPA:GSZ) also operates within Asia (9% of revenue), North America (6% of revenue) and several other smaller markets.
At present levels, the company is trading at a P/B value of 0.65, net-debt-to-equity is expected to be 52% for fiscal 2013 and the company is working on reducing net-debt by selling off non-core assets. Interest payments were covered 3.5 times by EBIT during the last reported year. GDF offers a 9% dividend yield, which based on 2012 numbers was covered 1.6 times by free cash flow and a similar ratio is expected this year. At present GDF Suez SA (EPA:GSZ) is trading at a 2013 P/E of 12.8. On a 2013 EV/Revenue basis GDF is undervalued in comparison to its European peers by 14.3%.
Contrarian Stocks: Out of favor with customers
Struggling restaurant operator Ruby Tuesday, Inc. (NYSE:RT) is a property and buy-out play. Ruby has been trying and failing to turn itself around during the past few years by selling off restaurants and redesigning its menu offerings, but comp sales figures have been disappointing. As a result, the company’s shares have slumped to five-year lows, excluding the 2008/2009 period, the shares have slumped to a low not seen since 1997. However, Ruby owns the majority of its restaurants and after recent declines, this property is now worth more than Ruby Tuesday, Inc. (NYSE:RT)’s market cap. Based on full-year 2013 numbers, Ruby’s property is worth $860 million compared to the current market cap of $348 million. What’s of more interest though, is Ruby’s recent admission that management has hired Goldman Sachs to explore strategic alternatives. According to sources, the restaurant chain is seeking a leveraged buyout.
Contrarian Stocks: Property play
Anther property play is Britain’s fourth largest food and drug retailer Wm. Morrisons Supermarkets plc (LON:MRW). Like Ruby, Morrisons has been struggling to compete with peers and comp sales collapsed nearly 10% over the key holiday trading period. Morrisons owns its own property, like most British retailers, and Wm. Morrison Supermarkets plc (LON:MRW)’ property portfolio includes offices, superstores, warehouses and even its own slaughterhouses. In total, this property is worth £8.6 billion, $14.3 billion at current exchange rates. After recent declines, Morrisons’ market cap is only £5.6 billion ($9 billion). Elliott Associates has taken a stake and is pushing for a break up, or spin-off of the property portfolio.
Contrarian Stocks: Lack of demand
High costs and a lack of demand for quality leather Italian furniture through the global recession has hit Natuzzi, S.p.A (NYSE:NTZ) hard. However, things could be about to change as Natuzzi recently announced its turn-around plan, which included halving its expensive Italian work force, opening more stores in developing markets and increasing marketing expenditure. Further, Natuzzi, S.p.A (NYSE:NTZ) has value locked away in its balance sheet. The company has property worth €154 million ($208 million) and €64 million ($86 million) of cash, debt amounts to €37 million ($50 million) and there is a small pension deficit of €25 million ($34 million). Still, shareholder equity is €447 million ($603 million) and the company’s current market cap based on the NYSE ADR is $138 million.