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Not all low-priced stocks are cheap -- the price does not matter, nor does it indicate the stock's valuation. However, low-priced stocks with good growth prospects and low P/E multiples tend to outperform on positive earnings and outlooks -- especially since Wall Street usually looks out a few quarters into the future.

Here we discuss companies that have solid earnings forecasts for the next couple of years, have relatively low P/E multiples, and are priced below $15. In order to find earnings forecasts, we take a look at EPS trends over a period of time instead of at a particular point on the graph to gauge momentum.

1. Weatherford International Ltd. (NYSE:WFT)

With a market cap of more than $9 billion, Weatherford International provides equipment and services to oil and natural gas industries. The winds are in favor of companies involved in the oil and natural gas drilling and related operations, such as National Oilwell Varco (NYSE:NOV) and Weatherford. These businesses will see their revenues and earnings grow as the demand for energy increases in the long term.

  • Current Price (as of April 1, 2013): $12.18
  • Next year's estimated P/E: 9.0
  • EPS Growth (next year): 49.6%
  • Long-Term EPS Growth (three to five years, forward): 29.2%
  • EPS Growth (this year vs. previous): 54.6%
  • Sales Growth (for next year): 9.10%
  • EPS forecasts for future years: Positive (see graph below).
    WFT- EPS Trends

2. Aircastle Ltd. (NYSE:AYR)

Yielding a solid $0.66 (or about 4.8%) dividend, Aircastle Limited is in the business of trading and distribution of aircraft -- the company leases passenger and freight aircraft globally. According to a survey by IATA, the aircraft industry is bouncing back from a 2012 bottom and the CFOs of airline companies are showing increased confidence due to higher utilization rates, higher air traffic volumes, and increased passenger demand in the next couple of years. These industry-level catalysts are expected to help the company have strong earnings and revenue growth for the next year.

  • Current Price (as of April 1, 2013): $13.64
  • Next year's estimated P/E: 7.5
  • EPS Growth (next year): 17.3%
  • Long-Term EPS Growth (three to five years, forward): 24.3%
  • EPS Growth (this year vs. previous): 93.7%
  • Sales Growth (for next year): 8.60%
  • EPS forecasts for future years: Positive (see graph below).
    AYR - EPS Trends

3. Southwest Airlines Ltd. (NYSE:LUV)

Southwest Airlines is another airline stock that will benefit from increased air traffic volume and aircraft fleet utilization rates. Southwest is the fourth largest airline in the United States, with a corporate strategy of doing away with connecting flights. It focuses on short-haul domestic flights (around 500 miles or two to three hours in duration).

  • Current Price (as of April 1, 2013): $13.33
  • Next year's estimated P/E: 7.5
  • EPS Growth (next year): 22%
  • Long-Term EPS Growth (three to five years, forward): 32.6%
  • EPS Growth (this year vs. previous): 77.5%
  • Sales Growth (for next year): 3.9%
  • EPS forecasts for future years: Positive (see graph below).
    LUV - EPS Trends

4. MEMC Electronic Materials Inc. (WFR)

MEMC Electronic Materials produces silicon wafers and other materials for micro-electronic applications in the semiconductor as well as the solar industry. The company has several catalysts working in its favor, including some big contracts in Bulgaria, Mexico, Chile, Jordan, Brazil and Europe. It also has a huge opportunity in the solar space in North American markets and in rural areas of developing countries. This article provides a comprehensive overview of catalysts as well as the risks associated with investing in this company.

  • Current Price (as of April 1, 2013): $4.30
  • Next year's estimated P/E: 9.1
  • EPS Growth (next year): 128%
  • Long-Term EPS Growth (three to five years, forward): 15%
  • EPS Growth (this year vs. previous): 25.3%
  • Sales Growth (for next year): 13.5%
  • EPS forecasts for future years: Positive (see graph below).
    WFR - EPS Trends

Conclusion

One must consider the risks when investing in low-priced stocks. These stocks usually tend to swing wildly on market pullbacks. However, if you stick to the fundamental story behind a stock and play it for the long run, chances are you will succeed more often than not.

Weatherford International, Aircastle, Southwest Airlines, and MEMC Electronic Materials are four companies that are in the process of expanding their bases in industries that have favorable outlooks in the coming years. If you are expecting a "Sell in May" plunge this summer, add these stocks to your watch lists and consider buying them on market pullbacks.

Source: Low-Priced Stocks With High Forecast Growth