Wells Fargo’s ‘Value Equity List’ – Stocks with potential that trade at a discount

Wells Fargo Investment Institute analysts updated their “value equity list.”

These picks are Russell 1000 Value Index (NYSEARCA:IWD) stocks WF analysts believe are trading at a discount to their underlying fundamentals and have potential to reduce or eliminate that discount.

“Our objective is to provide investors a list of stocks that may generate attractive returns on a long-term basis as the stock price adjusts to better reflect the underlying fundamentals of the company,” said Analyst Ian Mikkelsen.

Analysts also consider their current valuation relative to history, peers, and the market; their long-term growth potential; their return on invested capital; the stability of their revenues and earnings; price volatility; and their financial strength.

The stocks have a market cap of at least $4B.

These are the stocks, divided by sector:

Communication services

• Verizon Communications Inc. (VZ) – NTM P/E: 9.5x; Consensus long-term EPS growth: 1%
• The Walt Disney Co. (DIS) – NTM P/E: 18.2x; Consensus long-term EPS growth: 18%

Consumer discretionary

• AutoZone Inc. (AZO) – NTM P/E: 19.2x; Consensus long-term EPS growth: 14%
• General Motors Co. (GM) – NTM P/E: 5.0x; Consensus long-term EPS growth: 5%
• Las Vegas Sands Co. (LVS) – NTM P/E: 16.7x; Consensus long-term EPS growth: 14%
• Ulta Beauty Inc. (ULTA) – NTM P/E: 16.6x; Consensus long-term EPS growth: 3%

Consumer staples

• The Kroger Co. (KR) – NTM P/E: 12.1x; Consensus long-term EPS growth: 5%
• Mondelez International Inc. (MDLZ) – NTM P/E: 21.5x; Consensus long-term EPS growth: 7%
• Target Corp. (TGT) – NTM P/E: 15.3x; Consensus long-term EPS growth: 12%

Energy

• Halliburton Co. (HAL) – NTM P/E: 9.0x; Consensus long-term EPS growth: 8%
• Exxon Mobil Corp. (XOM) – NTM P/E: 13.9x; Consensus long-term EPS growth: 5%

Financials

• Chubb Ltd. (CB) – NTM P/E: 13.0x; Consensus long-term EPS growth: 2%
• Citigroup Inc. (C) – NTM P/E: 9.5x; Consensus long-term EPS growth: 26%
• JPMorgan Chase & Co. (JPM) – NTM P/E: 12.8x; Consensus long-term EPS growth: 4%
• Markel Group Inc. (MKL) – NTM P/E: 17.3x; Consensus long-term EPS growth: none
• Principal Financial Group Inc. (PFG) – NTM P/E: 10.5x; Consensus long-term EPS growth: 13%

Health care

• Centene Corp. (CNC) – NTM P/E: 11.5x; Consensus long-term EPS growth: 8%
• CVS Health Corp. (CVS) – NTM P/E: 8.4x; Consensus long-term EPS growth: 2%
• Gilead Sciences Inc. (GILD) – NTM P/E: 12.8x; Consensus long-term EPS growth: 9%
• Medtronic Plc (MDT) – NTM P/E: 16x; Consensus long-term EPS growth: 6%

Industrials

• Emerson Electric Co. (EMR) – NTM P/E: 17.9x; Consensus long-term EPS growth: 14%
• Honeywell International Inc. (HON) – NTM P/E: 19.3x; Consensus long-term EPS growth: 9%
• PACCAR Inc. (PCAR) – NTM P/E: 12.9x; Consensus long-term EPS growth: 0%
• Union Pacific Corp. (UNP) – NTM P/E: 21.6x; Consensus long-term EPS growth: 10%

Information technology

• Applied Materials Inc. (AMAT) – NTM P/E: 20.2x; Consensus long-term EPS growth: 12%
• Check Point Software Technologies Ltd. (CHKP) – NTM P/E: 20.0x; Consensus long-term EPS growth: 8%
• Microchip Technology (MCHP) – NTM P/E: 35.3x; Consensus long-term EPS growth: -11%
• Western Digital Corp. (WDC) – NTM P/E: 8.4x; Consensus long-term EPS growth: -10%

Materials

• DuPont de Nemours Inc. (DD) – NTM P/E: 20.4x; Consensus long-term EPS growth: 6%
• PPG Industries Inc. (PPG) – NTM P/E: 14.9x; Consensus long-term EPS growth: 7%

Real estate

• Simon Property Group Inc. (SPG) – NTM P/E: 13.3x; Consensus long-term EPS growth: 1%