“Be Greedy when others are Fearful” -Warren Buffett-
To anyone interested in taking advantage of the AA+ rating by purchasing undervalued stocks, which are plummeting due to the emotional sell off caused by the downgrade, I have listed a few stocks I believe are worth purchasing and why I believe so.
WELLS FARGO BANK (WFC)
Simply put, the EPS is high (2.57), and it is currently listed at a price of $23.84. Warren Buffett added to his holdings of this stock a while back by 5% and his purchase prices were between $23.25 and $28.57, with an estimated average price of $26.11. The stock is currently priced well below $26.11, and it will probably fall even more this week (making it a better bargain). This line of thinking has served me well, as I bought GE at $9/share after reading that Buffett bought $3 Billion worth of GE at around $12/share back in 2008.
Aflac gets 70-75% of its earnings from Japan, and thus the company has taken a hit having to pay out claims engendered by the Tsunami. With the US’s AA+ rating, the company has taken another big hit so the stock price has collapsed (Japan also owns most of our debt after China). Due to it’s size,high EPS (3.81), extremely cash rich business, and niched supplemental products, I have no doubt this stock will prevail after the intense losses it’s suffering due to claims paid out due to the Tsunami. Aflac also is considered the number one brand in the health insurance field. Hopefully this stock continues to fall thanks to the AA+, making it an even more appealing purchase. Did I mention I am a fan of their commercials!??
BRITISH PETROLEUM (BP)
Similar to AFLAC, BP’s stock took a hit due a specific and highly publicized event. The DeepWater Horizon oil spill left the American public with a negative outlook on BP, and BP has to pay huge sums for Gulf Restoration. However, after looking at the numbers (EPS of 6.32) BP will no doubt remain solvent, and prevail after this setback. The AA+ rating has further beat down this stock price, which is currently listed at $38.41.
Please email me at TheRisetoWealth (at) gmail.com if have spotted any other stocks that you think are currently undervalued and worth considering.