Are market laggards Vodafone Group plc (LON: VOD), BG Group plc (LON:BG) and Randgold Resources Limited (LON:RRS) now good value?
The FTSE 100 index broke through the 6,400 level today, putting it up 22% (over 1,000 points) on its 52-week low.
Not all companies have joined in the great rally. As a contrarian investor, I'm always interested in stocks that are out of favour with the market. Unloved shares have the potential to be some of the best long-term investments.
Mobile giant Vodafone Group (LSE: VOD) (NASDAQ: VOD.US), gas specialist BG Group (LSE: BG) (NASDAQOTH: BRGGY.US) and top Footsie gold miner Randgold Resources Limited (LSE: RRS) have all sunk while the market's soared.
At a current price of 163p, Vodafone is down 15% from its 52-week high.
This £80bn titan is now trading on a forecast price-to-earnings (P/E) ratio of 10.7 for the year to March 2013, and offers a prospective dividend yield of 6.2%.
Of course, companies don't trade on these kinds of value ratings for nothing.
Many investors were disappointed at the back-end of last year when the board decided to use a £2.4bn distribution from the company's US associate Verizon Wireless on a share buyback programme rather than pay a special dividend.
Vodafone's ordinary dividend is also up for review this year, while continuing revenue weakness in Europe -- particularly Southern Europe -- has added to the doom and gloom.
Nevertheless, for income seekers, that 6.2% yield from one of the Footsie's biggest mega-caps has to look attractive -- even if future dividend growth is more modest than in the past.
At a current share price of 1167p, BG Group is down 25% from its 52-week high.
Once seen as a rare FTSE 100 growth stock -- and rated accordingly -- this gas and oil group is now trading on a more humdrum forecast P/E of 14 for the year to December 2013, though it retains a skinny growth-stock yield of 1.5%.
Production setbacks and operating-cost issues, meaning BG has had to lower its volume targets through to 2015, have cooled the market's love affair with the stock.
However, BG's world-class assets -- estimated by analysts to be worth as much as £19 a share -- and the possibility of a bid for the company, have this stock on the radar of short- and long-term contrarians alike.
At a current share price of 5525, Randgold Resources is down almost 30% from its 52-week high.
This highly successful gold miner, which has a history of outperforming both its rivals and the price of gold, is now trading on less than 15 times forecast earnings for the year to December 2013, compared with a P/E in the 20s over the last couple of years, and higher still before that. As is typical with gold miners, the dividend yield is negligible at 0.7%.
Rising costs and a few operational setbacks in the latter part of last year, combined with the weakening price of gold since October, have been the cause of Randgold's undoing.
Nevertheless, if you're in the market for a leveraged play on the price of gold, Randgold -- with its proven management and substantial resources -- looks well worth considering at the current price.
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> G A Chester does not own shares in any of the companies mentioned in this article – but does own shares in "The Motley Fool's Top Growth Stock For 2013".