5 Value Stocks Include Verizon and Staples

NEW YORK (TheStreet) -- When 86.4% of all stocks are overvalued it is next to impossible to find a true value stock in the S&P 500. In my screen of ValuEngine data I define a value stock as having a buy rating, undervalued by at least 5% and projected to gain at least 7.5% over the next 12 months. Only five stocks satisfied these criteria and three are in the utility sector: FirstEnergy (FE), Frontier Communications (FTR) and Verizon (VZ). The utilities sector has an overweight rating as 90.5% of the 210 companies in this sector have buy or strong buy ratings.

Two of the five value stocks are trading under five bucks a share making them 'options on survival.' One is Frontier Communications. The other is Advanced Micro Device (AMD) in the computer and technology sector and it also has an overweight rating as do 49.6% of the 1129 stocks in the sector have buy or strong buy ratings.

The fifth value stock is office supplies company Staples (SPLS) from the retail-wholesale sector which also has an overweight rating as do 81.9% of the 343 stocks in this sector have buy or strong buy ratings.

Advanced Micro Devices ($3.87) is a semiconductor company that is also in the PHLX Semiconductor Index (^SOX). Advanced Micro Devices has a buy rating and is 27.9% undervalued and gained 61.3% in 2013 with a projected gain of 49.7% in 2014, and is above its 200-day simple moving average at $3.58. Note that during the tech bubble of 1999/2000 this stock was above $45 a share. The stock has a positive weekly chart profile with rising momentum and above its five-week modified moving average at $3.68 and is below its 200-week SMA at $5.74, which is a logical price target. My quarterly value level is $2.98 with a weekly pivot at $3.88 and monthly risky level at $4.66.

The semiconductor index rose 39.3% in 2013 to 535.03 and has a first half 2014 semiannual value level at 490.52 with a first quarter pivot at 536.98, a January risky level at 544.70 and semiannual risky level at 548.36.

FirstEnergy ($32.98) provides electricity and natural gas in northern and central Ohio and western Pennsylvania. The utility has a buy rating and is 11.0% undervalued with a loss of 21% in 2013 and a projected gain of 11.4% in 2014, and is below its 200-day SMA at $38.41. FirstEnergy has a negative but oversold weekly chart profile with its five-week MMA at $33.65 and its 200-week SMA at $40.87 as a logical price target. My weekly value level is $29.13 with a semiannual pivot at $32.43 with a quarterly risky level at $36.28.

Frontier Communications ($4.65) provides telephone, TV and Internet services to consumers and small businesses through rural local exchange telephone companies. Frontier has a buy rating and is 8.2% undervalued with a gain of 8.6% in 2013 and a projected gain of 11.5% in 2014, and is above its 200-day SMA at $4.32. Frontier has a neutral weekly chart profile with its five-week MMA at $4.62 and its 200-week SMA at $5.95 as a logical price target. My semiannual value level is $3.64 with a monthly pivot at $4.61 and semiannual risky level at $5.01.

Staples ($15.89) provides office supplies, products and services to consumers and small businesses. Staples has a buy rating and is 8.2% undervalued with a gain of 39.4% in 2013 and a projected gain of 9.5% in 2014, and is above its 200-day SMA at $15.13. The stock has a neutral weekly chart profile with its five-week MMA at $15.64 and its 200-week SMA at $16.51. My quarterly value level is $14.53 with an annual pivot at $15.54 and annual risky level at $17.57.

Verizon ($49.14) is one of the largest providers of wireline and wireless communalizations services and includes the Fios platform of telephone, TV and high-speed internet connectivity services. Verizon has a buy rating and is 6.6% undervalued with a gain of 13.6% in 2013 and a projected gain of 8.7% in 2014, and is just below its 200-day SMA at $49.65. Verizon has a neutral weekly chart profile with its five-week MMA at $49.06 and its 200-week SMA at $39.78. My weekly value level is $48.20 with a semiannual pivot at $49.60 and semiannual risky level at $50.75.

On a year-to-date basis the Dow utility average was the best performing average at the end of April 2013 with a gain of 18.7%. With the rise in Treasury yields that began in May, selling pressure shifted into the utilities sector, which ended 2013 below its 200-day SMA at 495.89 with a gain of 8.3%. The weekly chart profile is neutral with the five-week MMA at 490.08 and the 200-week SMA at 445.90. My monthly value level is 440.53 with quarterly and annual pivots at 496.84 and 497.53 and semiannual and annual risky levels at 504.74, 524.37 and 548.70.

At the time of publication the author held no positions in any of the stocks mentioned.

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This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Richard Suttmeier is the chief market strategist at ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.

Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.

Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.

Click here for details on Suttmeier's "Buy and Trade" investment strategy.

Richard Suttmeier can be reached at RSuttmeier@Gmail.com

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