DEEP VALUE: W.W. Grainger
Market cap: $6.1 billion
P/E ratio: 15
Current ratio: 3.3
Dividend yield: 2.0%
Even in a recession, companies need to keep their buildings clean and maintained, creating steady demand for W.W. Grainger, which distributes facilities maintenance products. The company just increased its quarterly dividend by 10%, and Goldman Sachs analyst Terry Darling says Grainger can grow through the downturn by expanding its sales force and taking advantage of smaller competitors that don't have cash or access to credit.
The company has an aggressive share buyback program, and Darling says earnings could grow by over 11% next year.
--K.B.
NEXT: SMALL CAP: Aaon
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Last updated June 11 2009: 10:27 AM ET
Criteria include prices no more than 15 times average earnings per share over the past three years, 10 years of positive earnings, annual per-share earnings growth of 3% or more, 10 years of uninterupted dividends, and curent ratio (assets divided by liabilities) of 2 or better. All data related to stock price as of June 1, 2009. P/E ratios based on average three-year earnings.
