The market has had a strong few weeks and is back up near the top of its trading range on hopes that Europe will finally get its act together. I think investors are likely to be disappointed and will suffer a pull back when the news out of Europe contains less of a plan to solve the crisis than is needed once again. Financials are likely to hit hard, which will lead to some good bargains to be had in two stocks that have low valuations and good technical support at slightly lower price levels.
4 reasons Franklin Resources (BEN) is a good value at under $100 a share:
1. It has good technical support at 10% under current price levels (See Chart)
2. Franklin Resources is selling near the bottom of its five year valuation range based on P/E, P/S and P/CF.
3. It has forward PE of just over 10 which is an over 30% discount to its five year average
4. Franklin Resources has an AA- rated balance sheet with almost $5B in net cash on its books.
4 reasons Wells Fargo (WFC) is a good long term buy.
1. The stock has good technical support at around $24. (See Chart)
2. Wells Fargo is selling in the bottom third of its five year valuation range based on P/E, P/S and P/CF.
3. WFC has met or beat earnings estimates for six straight quarters and has a forward PE of just over 8 which is almost a 40% discount to its five year average.
4. Stern Agee and FBR Capital upgraded Wells Fargo in August, the median analysts’ price target on WFC is $32 and it has an A+ rated balance sheet.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in WFC over the next 72 hours.
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