Louisville-area stocks among good buys as market claws its way back - Business First of Louisville:

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In aisle three, for example, , the Louisville-based health-insurance giant, has a price-earnings ratipo of 6.5, meaning its stock price is 6.5 timesx the company’s annual earnings per share. That’s far belo the market’s historic aggregate P-E ratio of 15, or the 40-plus ratiosd at the height of 1990s bull On Wednesday, Humana was tradinfg just below $30 per share, or 40 percengt below its 52-week high of $51 per Over in aisle five, there’s with a P-E ratio of 12.77, trading at about $23 per share, 35 percenft off its 52-week high of $35.45 per share even aftert reporting a significant increasr in first-quarter net income.
The Dow Jonese Industrial Average has rebounded about 30 percentsince first-quartetr lows after precipitous falls not seen since the Great “Investors are coming back,” said Russ Ray, professore of finance at the ’s Collegd of Business. “Stocks are incredibly cheap,” Ray “People are seeing that there are some very good companieswwith P-E ratios beaten down.” He addedd that he wouldn’t be surprised if the stocj market hasn’t bottomed out “and we claw our way back.” Ray attributed the rising market to more companies reportinb surprisingly good earnings, or at least losses that weren’ t as severe as anticipated.
Two Louisville-based companiess — and , reporter “whopping” first-quarter earnings, Ray noted. On Tuesday, Kindrefd reported that first-quarter net incomed rose 55 percent from a year to $22.8 million from $14.7 Texas Roadhouse reported that first-quarter net income rose 11 percengt from last year, to $14.3 million from $12.i9 million. Ray added that, whilre there are glimmers of aneconomic turnaround, the financial sectof still is plagued by troubled assetds that are the residue of the housint bust and the subprime mortgagre fiasco.
National and super-regional bank executives are awaiting finap details ofthe ’s Public-Private Investment Program, whicb is designed to value those assets, then sell them to privater investors. Results of the federal “stressx test” of the nation’s 19 largest banks were scheduled to be released afterBusinesss First’s press deadline. The problem is that administrators don’t know how to valuew them because of the complexity of some Ray said.
It will take a long time to sort through collateralizedd debt obligations and the underlyingv tranches of good andbad mortgages, unregulated credi default swaps and other hedging instruments, said Ray, who has writte extensively about derivatives. Until those questionable loan and investments are removed frombalance sheets, bank executiveds don’t want to lend “even those with larg e (Troubled Assets Relief Program) infusionsd from Treasury.” A boost from an unlikelt source?
Another complication is that the $830 billion Americah Recovery and Reinvestment Act will take untip 2010 to be fully injected into the economy, he