Investing Like Billionaire Dan Loeb: Virgin Media Inc. (VMED), Murphy Oil Corporation (MUR)

The financials show Murphy Oil Corporation (NYSE:MUR) to be an undervalued situation. The company has a forward P/E of 9.77 and a PEG ratio of 0.94. The return on equity is an impressive 10.88% and the book value per share is $46.90. Murphy pays a dividend of $1.25 per share for a yield of 2.00%. Judging from the financials, Murphy has the resources to increase the dividend to shareholders.

This is another company with solid financials that can increase its dividend. Tesoro currently only pays an $0.80 dividend for a yield of 1.40%. Considering the company’s solid balance sheet, I see the dividend increasing. The stock is trading just shy of the 52-week high of $59.56. Of the 20 analysts that follow the stock, 5 have it rated as Strong Buy, 8 a Buy, and 7 a Hold.

Loeb is a big fan of Morgan Stanley (NYSE:MS) CEO Jame Gorman. He thinks Gorman has positioned Morgan Stanley into being able to grow its core investment banking and trading businesses. Most analysts see EPS growth of 14% over the next 5 years.

If Loeb thinks the company is positioned for growth, it also helps that the company has a cheap valuation. Morgan Stanley has a forward P/E of 8.96 and a PEG ratio of 0.58. The stock is currently trading at $22.67 compared to its book value of $30.70. As you can see, Morgan Stanley is cheap from these metrics.

We can never know when Loeb is getting out of these positions and that’s what worries me about getting into his more high-profile picks of Yahoo! and Herbalife. He already has gains in those positions and I don’t want to be buying when he is selling. With these 5 stocks I mentioned – Virgin Media, EADS, Murphy Oil Corporation (NYSE:MUR), Tesoro, and Morgan Stanley – they’re backed by valuation analysis that supports owning them regardless what Loeb does, but I do thank him for pointing these stocks out!