This Day On The Street
Continue to site
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

Buffett Disciples' Two Value-Stock Picks

BOSTON ( TheStreet) -- Warren Buffett, upon reading Benjamin Graham's Security Analysis, decided he had to attend Columbia Business School to study value investing.

As the story goes, Buffett read the book so many times that when he finally enrolled in Graham's course, he could quote the text from memory. He received his degree in 1951. Columbia, still the educational epicenter of value investing, offers an MBA with a focus on the methodology.

Buffett, who turned 80 this year, announced this week that 39-year-old hedge fund manager Todd Combs will eventually manage the investment portfolio at Berkshire Hathaway (BRK.A), the holding company he built and has run for decades. Combs also attended Columbia Business School.

In the Columbia Business School newsletter Graham and Doddsville, aspiring Buffetts write-up their stock ideas. Here is a look at two pitches in the fall edition.

2. CoreLogic (CLGX - Get Report) sells consumer, financial and property data as well as analytics and services to businesses and government agencies. Its products include appraisals, broker price opinions, data repository solutions, default and REO valuations and other advanced data and services.

CoreLogic was spun off from insurer First American (FAF) in June. Its stock has dropped 7.9% since, hitting a low on Aug. 31. The shares have rallied 4.3% from the trough.

Alex Latushkin makes a compelling argument for CoreLogic, noting that it boasts a leading market share in a niche segment, holds five patents, has a management team that has been working together for 15 years and enjoys a low-cost business model, with more than 50% of its employees working in cheaper overseas markets. Latushkin's bear-case entails a stock price of $14, suggesting 22% downside. His bull case is $37, implying 105% upside.

CoreLogic is scheduled to release third-quarter results Nov. 4. Second-quarter adjusted net income decreased 17% sequentially to $24 million, or 35 cents a share. CoreLogic missed analysts' consensus earnings target by 17%. Its operating margin contracted from 12% to 5.4%. Return on assets touched 4.1% and return on equity came in at 6.6%.

Seven analysts cover CoreLogic. One rates it "buy" and six rank it "hold." None rate it "sell." A median target of $21.75 suggests the stock has roughly 21% of upside. Barclays (BCS) and KBW (KBW) expect the shares to command $22, implying a one-year gain of 21%.

Based on peer valuation, CoreLogic is cheap. It trades at a trailing earnings multiple of 17, a forward earnings multiple of 14, a book value multiple of 1.3, a sales multiple of 0.5 and a cash flow multiple of 5.9, reflecting discounts of 17%, 24%, 82%, 84% and 66% discounts to IT services industry averages. In the latest quarter, institutional investors scooped up shares. Of the stock's 30 largest holders, 17 amplified their bets, four held steady and nine lessened their positions. Fidelity Management is the largest shareholder, with 7% of the float.
1 of 2

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
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
USPH $48.45 0.00%
CLGX $32.24 0.00%
YHOO $27.05 0.00%
TSLA $147.99 0.00%
AAPL $95.01 0.00%


Chart of I:DJI
DOW 16,027.05 -177.92 -1.10%
S&P 500 1,853.44 -26.61 -1.42%
NASDAQ 4,283.7530 -79.3910 -1.82%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs