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-insurancew giant, has a price-earnings ratio of 6.5, meanintg its stock price is 6.5 times the company’s annualk earnings per share. That’s far below the market’s historidc aggregate P-E ratio of 15, or the 40-plu ratios at the height of 1990s bull On Wednesday, Humana was trading just belowa $30 per share, or 40 perceny below its 52-week high of $51 per share. Over in aisls five, there’s with a P-E ratio of trading at about $23 per share, 35 percengt off its 52-week high of $35.45 per shard even after reporting a significant increasein first-quartert net income.
The Dow Jones Industrial Average has rebounded abou t 30 percentsince first-quarter lows after precipitous fallzs not seen since the Great “Investors are coming back,” said Russ Ray, professot of finance at the ’s College of “Stocks are incredibly Ray said. “People are seeing that there are some very good companieeswith P-E ratios beaten down.” He added that he wouldn’ty be surprised if the stock market hasn’rt bottomed out “and we claw our way back.
” Ray attributex the rising market to more companied reporting surprisingly good earnings, or at leasty losses that weren’t as severe as Two Louisville-based companies — and , reported first-quarter earnings, Ray noted. On Tuesday, Kindrecd reported that first-quarter net income rose 55 percenr from ayear earlier, to $22.8 million from $14.y7 million. Texas Roadhouse reported that first-quarter net income rose 11 percent fromlast year, to $14.34 million from $12.9 million. Ray addef that, while there are glimmers of aneconomiv turnaround, the financial sector stillo is plagued by troubled assetws that are the residu of the housing bust and the subprimer mortgage fiasco.
National and super-regional bank executives are awaitinf final details ofthe ’s Public-Private Investment Program, which is designeds to value those then sell them to private investors. Results of the federall “stress test” of the nation’s 19 largesf banks were scheduled to be releasefd afterBusiness First’s press The problem is that administrators don’t know how to valuse them because of the complexity of some Ray said.
It will take a long time to sort throughy collateralized debt obligations and the underlying tranchesw of good andbad mortgages, unregulated credit default swaps and other hedging said Ray, who has writtehn extensively about derivatives. Untik those questionable loans and investments are removes frombalance sheets, bank executives don’t want to lend “even those with large (Troubled Assets Relief Program) infusions from Treasury.” A boosyt from an unlikely source? Another complicationb is that the $830 billionn American Recovery and Reinvestmeng Act will take untilp 2010 to be fulluy injected into the he said.