This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Contrarians' Day: Will the Real Contrarians Please Stand Up?

"Back in 1999, there were no contrarians -- after a market break, everybody is," Dreman joked. These days, Dreman is still very much contrary about the Nasdaq Composite. "It's basically running on fumes. The price-to-earnings multiple for the year is about 35, if you believe the estimates," Dreman said. "But this is getting to be an old comedy act -- raise the estimates in the first half, then lower them in the second."

Dreman says the Nasdaq may still go up 35% or more before fundamentals drag it down, but he is shying away from the tech sector. Besides, he finds that a bundle of value stocks are still relatively cheap, despite the broad-based recovery.

Of course, Dreman's contrarian approach of scooping up unloved, trouble-plagued companies carries risks, too. But his fund's three-, five- and 10-year average annual returns rank in the top 8% of all large-cap value funds -- it's hard to argue with 8.64% a year on average during the past three years.

Among Dreman's current contrarian favorites these days is Altria (MO), the litigation-besieged tobacco giant. "This stock is extremely cheap, trading with a P/E of 8 and a dividend yield over 6%." Dreman thinks the litigation landscape is starting to improve for the company. Meanwhile, he values the firm's oversees business at about $28 a share, and its Kraft stake at about $22. At the stock's current price of just under $45, the $4 billion-a-year domestic tobacco business is worth less than zero.

"A full turnaround may be 18 months to two years away, but this is a company with reasonable growth that has a multiple less than half the multiple of the S&P 500," Dreman says.
4 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
BA $140.57 0.26%
CCL $49.59 -0.54%
CMCSA $62.45 0.18%
NMR $7.21 5.10%
TLK $43.50 -0.48%

Markets

DOW 17,698.28 -31.83 -0.18%
S&P 500 2,071.64 -5.14 -0.25%
NASDAQ 4,995.0480 -14.1660 -0.28%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs