30 Attractive Companies Under $30: Fidelity's Low Priced Stock Fund Part II

Back in February, Valueexpectations.com released a blog highlighting Fidelity’s Low Priced Stock Fund that follows a strategy of only investing in stocks with a share price of under $35. In that blog we provided a list of 30 stocks that we thought were attractively priced according to The Applied Finance Group’s (AFG) valuation model broken up into three price brackets: under $10, $10 to $20 and $20 to $35.

From Feb 5th 2009 to June 5th 2009, the 30 stocks recommended as a group outperformed the S&P 500 by an average of 36.5%, the 10 stocks under $10 outperformed by 57.1%, the $10 to $20 stocks outperformed by 40.1% and the $20 to $35 stocks outperformed by 12.5% respectively.

Joel Tillinghast, the fund’s manager, began this fund with a strategy of only investing in stocks under $10. Since this strategy began, Fidelity has moved the stock price limit to $35 where it currently sits. Tillinghast believes that share price alone is not of importance but the lower priced, smaller-cap universe of stocks experiences the most frequent mispricings and also has the least amount of analyst coverage.

As an update to the prior blog on this strategy, Valueexpectations.com provided a list of 30 stocks that we believe are attractively priced and do not fit AFG's default sell criteria. Each group is ranked based on valuation attractiveness. AFG's analysis begins and ends with valuation, however along the way there are other key factors AFG considers when looking for buy opportunities: expected Economic Margin improvement, management quality, earnings quality.

Attractively Priced Companies Under $30

Comments

[Pearsonpc:]

Nice Article.

Jim Pearson
Attorneys

Jun 08 08:44 AM

[H.J. Huneycutt:]

Great list. I've had my eye on VLO, TSO, and LXK. I'm going to look into a few of the others on this list --- DYN looks interesting.

Jun 08 09:53 AM

[mouth:]

PFE can not stop tripping over it's own feet. The same for KG. DYN is intriguing. The company that is just waiting to take off is ORCL. It has gone nowhere for a decade, and yet it has some strong performers in it's basket of companies. Some Day

Jun 08 01:10 PM

[LillyM:]

I purchased EIX on advice from my Schwab financial "expert" and it immediately started losing ground. It is now half what I paid and showing no signs of recovery. Don't go there!

Jun 08 03:51 PM

[BeachRider:]

ORCL is on the edge with its Sun integration plan. Although they expect it to ADD to their top-line, many of us are anxious to see how that would-ever happen.

Jun 08 04:15 PM

[Old Trader:]

The run-up in cheaper priced stocks is no surprise if one subscribes to the notion that this has been something of a "garbage" rally.

Jun 08 11:07 PM

[at78rpm:]

Personally, I think BMY is the most under-rated stock around. They've paid dividends since 1900 and they have $9 billion in cash sitting around, with about $6 billion in long-term debt that can easily be paid off. They pay a decent dividend -- $1.28 a year, a yield of about 7%. The stock price doesn't really go anywhere, so it's not good for speculation; however, if you want to think of BMY as a bank paying 7% interest, it looks much more attractive.

Jun 09 03:40 PM

[Ellito:]

For DYN, an utility company, customers pay monthly. Good cash flow.
For EP, owns Oil & Gas pipelines, charge others fee and toll for using the pipelines, not affected by oil or gas prices.
Both were beaten down in recent months.
Now on the way up and never look back.

Jun 12 12:53 AM