Donald Trump has been extremely successful investing in real estate. His investments have made him a multi-billionaire. Mr. Trump purchased undervalued properties, and through improvements and the passage of time, these properties generally rose in value. In 2011, Mr. Trump decided to expand his investment horizon to include buying stocks. He invested in a handful of blue chips, most of which paid solid dividends. An article quotes Trump as saying: "I'm not a stock person. I love real estate, but good real estate is very hard to get." Donald Trump explained that he bought stock in Bank of America (BAC) , Citigroup (C) , Caterpillar (CAT) , Intel (INTC) , Johnson & Johnson (JNJ) , and Procter & Gamble (PG)."
Some of Donald Trump's favorite stocks are still trading at undervalued levels and this is giving investors a great opportunity to buy high quality companies with solid dividends, on the cheap. Here is a closer look at three companies that investors should take advantage of now:
Johnson & Johnson manufactures many consumer health care and medical products and sells under well known brands like Listerine, Motrin, Band-aid, Reach, Splenda, Tylenol, Lubriderm, Sudafed and many more. Watching this stock has been like watching paint dry, because it has barely moved in the past several months. Eventually, the market should see the value that this stock offers with the price to earnings ratio coming in around 12, and the the dividend rate offering a solid 3.5% yield. The company recently reported strong earnings with global sales for 2011 totaling $65.0 billion, an increase of 5.6% when compared to 2010. Trump was buying this stock when it traded around $64.36, so it's still a great value now.
Here are some key points for JNJ:
- Current share price: $65.69
- The 52 week range is $57.50 to $68.05
- Earnings estimates for 2011: $5.11
- Earnings estimates for 2012: $5.43
- Annual dividend: $2.28 per share which yields 3.5%
Citigroup, Inc. is a global banking and financial services giant. Citigroup has branches worldwide which gives it high potential growth from emerging market countries. It also has less liability with mortgage issues in comparison to other banks. Once the European debt crisis is resolved, Citigroup should be able to move much higher. The stock looks deeply undervalued when you consider that the book value is $60.78 and the price to earnings ratio is only around 7. Trump was buying this stock when it traded around $29.94, so the current price gives us a chance to buy at almost the same level.
Here are some key points for C:
- Current share price: $31.60
- The 52 week range is $21.40 to $51.50
- Earnings estimates for 2011: $4.04 per share
- Earnings estimates for 2012: $4.69 per share
- Annual dividend: 4 cents per share which yields .1%
Procter & Gamble is one of the world's largest consumer products companies and owns top brands like Charmin, Head & Shoulders, Olay, Pantene, Downy, Duracell, Tide, Braun, Fusion, Gillette, and many more. Procter & Gamble recently announced weaker than expected earnings and the stock dropped from about $68, down to around $63 per share. On the positive side, the company seems to be reacting to the situation and it agreed to cut 1,600 jobs which is expected to save about $240 million per year. It's easy to see why Trump likes this stock: the valuation is reasonable and the dividend beats the rates offered in money market, and other savings accounts, plus it has stable revenues. Trump was buying this stock when it traded around $61.62, so the recent dip gives us a chance to buy in almost as cheap.
Here are some key points for PG:
- Current share price: $63.21
- The 52 week range is $57.56 to $67.72
- Earnings estimates for 2011: $4.04
- Earnings estimates for 2012: $4.41
- Annual dividend: $2.10 per share which yields 3.3%
Data is sourced from Yahoo Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Disclaimer: No guarantees or representations are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.
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