Let me start off by noting that I have absolutely nothing against Apple . I swear by my iPhone 5 (good luck ever prying it from my hands) and I've actually been pondering opening a position in the company over these past few weeks as analysts from both sides of the aisle have poked, prodded, and tugged at Apple's forecasts in opposing directions.
Leave Apple alone, leave it alone!
However, the last few days have been particularly wild as contrasting reports between The Wall Street Journal, which is suggesting Apple is drastically cutting its iPhone 5 parts orders, and Brian Blair of Wedge Partners, who debunked the report and actually boosted his annual production forecast for iPhone 5 units by 10% to 180 million, have whipsawed Apple's share price. If we had a way of reading investor sentiment on Apple, I'd presume it'd be off the charts as investors continue to fall in love (or hate) with the stock. As evidence, I count 240 (that's two hundred and forty!) articles in Yahoo! Finance's news feed on Apple in just the past 18 hours as of this writing!
Fortunately, I have great news for us all: There are stocks in the investing universe other than Apple. In fact, there are more than 6,600 companies other than Apple that you can buy or sell on U.S. stock exchanges. Many of you might place Apple as the sun in your universe. Today I'm here to tell you that you've been living in a flat world that's actually spherical in nature.
I ran a screen using Finviz, in which I searched for the following attributes:
Price/book < 5
Price/cash flow < 15
PEG ratio < 1
EPS growth over the next five years > 15%
As you might imagine, the reason I chose this set of criteria has to do with Apple's fundamentals fitting nicely within these parameters. I wanted companies with strong growth prospects that are relatively inexpensive. Finviz returned a couple dozen companies, which I further whittled down (arbitrarily) into four candidates that you can buy right now:
Price/ Cash Flow
EPS Growth Next 5 Years
Goodyear Tire & Rubber
A world without Apple
Rather than worrying endlessly over what to do next with Apple, you should seriously give these four companies a look.
IAC is an Internet company involved in search, subscription, and advertising-based personals, market-matching, and video services. If it sounds like IAC does a lot, that's because it does. It operates the Ask.com search engine, runs personal websites like Match.com, connects service professionals with its Exact Match service, and runs CollegeHumor.com (don't act like you've never spent hours laughing on this site!).
IAC has crushed Wall Street's quarterly EPS projections by anywhere from 7% to 30% over the past four quarters and is pegged to deliver the highest five-year EPS growth out of these five screened companies thanks to its rapidly growing and diverse Internet offerings. You might be inclined to think that personal websites involving matchmaking would struggle in an economic downturn, but love is one of those very few factors that's somewhat impervious to price. With a forward P/E of just 11, and a dividend yield that slightly edges out Apple's (2.2% vs. 2.1%), I'd say it's worth a look.
Apple investors, tell me if this sounds familiar: a company's share price hammered on the prospect of increasing competition. The great news for Green Dot, a supplier of prepaid and reloadable debit cards, is that the market for non-cash transactions is huge and able to occupy many competitors. MasterCard CFO Martina Hund-Mejean noted last year that 85% of the world's transactions are still done in cash, leaving open the possibility for transactions facilitators like MasterCard, Visa, and Green Dot to penetrate a rapidly expanding and largely untapped market.
As it stands now, Green Dot is sitting on $188 million in net cash and is projected to grow at a brisk 24% per year over the next half-decade, partly because of its move into mobile banking. A lot will depend on its ability to branch out from Wal-Mart, but I'd peg the rising popularity of debit cards and mobile banking as a sure sign that Green Dot's future is looking up.
Goodyear Tire & Rubber
Goodyear Tire likely needs no introduction as it's one of the largest tire manufacturers in the world. The key components to success for Goodyear include the need for strong sales in the auto industry with regard to new cars as well as replacement parts, and low rubber prices, which are vital to maintaining its margins. Like the previous two companies, the good news continues for Goodyear, as Edmunds.com is forecasting 4% growth in new-car sales in 2013 to 15 million units. Furthermore, rubber prices have remained well off their highs as Chinese demand has failed to pick back up.
Goodyear's CEO, Richard Kramer (whom I featured as an incredible CEO in 2012), projected and has stood by an assessment that his company can generate $1.6 billion in operating income this year. Based on its current forward P/E of just 6 and projected five-year growth rate of nearly 28%, I wouldn't hesitate to call Goodyear an incredible value at this level.
Like Goodyear, the world's largest investment bank needs little introduction. Goldman Sachs just yesterday released its full-year report, which highlighted a greater than tripling in its EPS as a low lending environment has created a new debt underwriting boom! The best part is that the Federal Reserve has taken such a lax stance on raising lending rates moving forward that the underwriting boom may continue for years to come.
For the recently ended quarter, net underwriting revenue more than doubled, net investment banking revenue rose 64%, and return on equity spiked to 16.5% from 5.8% a year ago. What's truly remarkable is that the distrust of the banking sector runs so deep that even following yesterday's results, Goldman continues to trade slightly below book value! With a high projected five-year growth rate and a favorable lending environment, there's little standing in Goldman's way of heading higher.
Let there be light
If anything, I hope this exercise has shown you that there does exist a world beyond Apple. We don't have to toss our adoration for Apple out completely -- even I keep an eye on Apple with my Watchlist -- but there are 6,600 other companies out there clamoring for your investment dollars, of which some offer similar, or even more attractive, qualities relative to Apple, as I've demonstrated above.
What companies are currently on your Watchlist? Share them with the community in the comments section below.
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The article 4 Stocks Not Named Apple That You Can Buy Right Now originally appeared on Fool.com.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of Apple and MasterCard. Motley Fool newsletter services have recommended buying shares of Apple, Visa, and Goldman Sachs, as well as creating a bull call spread position on Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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