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10 Undervalued Stocks to Watch

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Wal-Mart, McDonald's, and Pepsico make the list.

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Our goal is to help investors grow their capital and income base from which to generate cash for their current and future needs. To that end, we believe that shares of high-quality stocks purchased at an historically repetitive area of low-price to high-yield, offers the greatest potential for downside protection and upside appreciation.

Our "Timely 10" below is not just another best of, right now list. Rather, it is our reasoned expectation, based on our methodology and experience, that these 10 currently undervalued stocks offer the greatest real total-return potential over the next five years.

Do we believe that all 10 will appreciate simultaneously or immediately? Of course not.

Our four-plus decades of research and experience, however, leads us to believe that these stocks, purchased at current undervalued levels, are well positioned for both growth of capital and income.

Whether you are building a portfolio from scratch, are partially invested and seeking new positions, or are fully invested and in need of some affirmation and hand holding, these stocks represents our top 10 current recommendations.

The list is comprised of stocks that generally have an S&P Dividend & Earnings Quality ranking of A- or better, a designation for exemplary long-term dividend growth, and a P/E ratio of 15 or less.

They also have a payout ratio of 50% or less, long-term debt-to-equity of 50% or less (75% for utilities), and technical characteristics on their daily and weekly charts that suggest the potential for imminent capital appreciation.

Based on this criteria, here are our current selections:
  • Chevron Corp. (NYSE:CVX)-yielding 3.3%
  • Coca-Cola (NYSE:KO)-yielding 2.9%
  • Baxter International (NYSE:BAX)-yielding 3.0%
  • McDonald's Corp. (NYSE:MCD)-yielding 3.3%
  • Occidental Petroleum (NYSE:OXY)-yielding 2.7%
  • Wal-Mart Stores (NYSE:WMT)-yielding 2.5%
Editor's Note: This IQ Trends article by Kelley Wright was originally syndicated by MoneyShow.

Below, find some more great investing and trading content from MoneyShow:

Spirited Buy Among Airlines

DaVita: Low-Beta Buffett Buy

6 Billion Reasons Vodafone Connects


Twitter: @TopProsTopPicks
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
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