Trying to identify undervalued cream of the crop investment opportunities is no easy task given the Dow is near all time historical highs.
Still, should investors just go home and cry in their bedroom with the lights turned off because it looks like they missed the boat on this bull market?
I'll leave the crying decision up to the reader but when it comes to finding undervalued dividend stocks I'll be the first one to say don't lose hope yet.
How can investors quickly identify undervalued, dividend stock opportunities that have cream of the crop potential in this pricey market though you wonder?
Simple, investors need to starting thinking outside of the box and getting out of there comfort zone when it comes to screening for investment opportunities in 2014.
In this market using bread and butter valuation metrics alone won't get anyone anywhere fast in my opinion.
Now if you're a bread and butter type of investor don't get flustered because I'm going to point out 4 undervalued dividend-paying stocks today that look ready to go higher in 2014.
Sounds great but how did I find them, right?
Creating A Solid Baseline
First, I looked for dividend-paying stocks that have a cheaper Forward P/E than the S&P 500.As well, the company's must have a market cap of at least $300M. These first two variables help provide a nice baseline list of dividend stocks to work off of.
Identifying Momentum Trends That Matter
I further drilled down this list of companies by only focusing on dividend-paying companies that had posted strong Quarter-over-Quarter revenue growth of at least 20%.
Using this type of metric helps point out which companies are building top-line growth momentum that's worth reviewing. Still, the list of potential stocks at this point is still too long and we all know that time is money so let's cut it down further.
Now Start Thinking Outside the Box
Now this is where investors need to start thinking outside the box.
Are you ready to do this?
Investors can do this by using non-conventional valuation metrics that can help identify undervalued dividend stocks that have a stronger-than-average probability of moving higher in 2014.
The non-conventional metric I used today is insider buying transactions. Specifically, I focused on insider buying that was 15% or higher over the last 6 months.
A company's management team has intimate knowledge of the current business environment, how the company is performing in that business environment, and how the company will likely perform moving forward.
Therefore, when management is willing to increase their stake in the company this is a bullish indicator that the stock could be undervalued or that good things are around the corner.
Putting It All Together
We've now gone from a starting list of 471 companies, way too long, to a short list of 4 targeted dividend stocks that dividend investors can do further independent due diligence on.
The list of stocks below is organized from highest to lowest market cap.:
1. Freeport-McMoran Copper & Gold Inc. (FCX)
Freeport-McMoran Copper & Gold Inc. engages in the exploration of mineral resource properties. Currently, Freeport-McMoran Copper & Gold Inc. trades with a market cap. of $34.63B and trades with a Forward P/E of 10.72.
In addition, Freeport-McMoran Copper & Gold Inc. offers a dividend yield of 3.75%, a Current Ratio of 2.10, and has seen its Sales (Q/Q) grow by 30.40%.
Over the last 6-months insider buying has increased by 23.12% with Freeport-McMoran Copper & Gold Inc.
On January 23, 2014 Barclays reiterated an Overweight rating Freeport-McMoran Copper & Gold Inc. but decreased its price target from $45 to $43.
2. Noble Corp. (NYSE:NE)
Noble Corp. operates as an offshore drilling contractor for the oil and gas industry. Currently, Noble Corp. trades with a market cap. of $7.89B and trades with a Forward P/E of 6.80.
In addition, Noble Corp. offers a dividend yield of 4.81%, a Current Ratio of 1.4, and has seen its Sales (Q/Q) grow by 22%.
Over the last 6-months insider buying has increased by 18.75% with Noble Corp.
On January 23, 2014 Cowen reiterated an Outperform rating for Noble Corp. but decreased its price target from $49 to $44.
3. Oaktree Capital Group, LLC (OAK)
Oaktree Capital Group, LLC operates as a global investment management firm that focuses on alternative markets. Currently, Oaktree Capital Group, LLC trades with a market cap. of $2.28B and trades with a Forward P/E of 9.45.
In addition, Oaktree Capital Group, LLC offers a dividend yield of 4.97%, a Current Ratio of 3.20, and has seen its Sales (Q/Q) grow by 78.10%.
Over the last 6-months insider buying has increased by 22.41% with Oaktree Capital Group, LLC.
There are no new analyst updates relative to Oaktree Capital Group LLC according to Finviz.com.
4. Laclede Group, Inc. (LG)
Laclede Group, Inc. is engaged in the retail distribution, sale, and marketing of natural gas in Missouri. Currently, Laclede Group, Inc. trades with a market cap. of $1.48B and trades with a Forward P/E of 14.91.
In addition, Laclede Group, Inc. offers a dividend yield of 3.38% and has seen its Sales (Q/Q) grow by 52.60%.
Over the last 6-months insider buying has increased by 22.41% with Laclede Group, Inc.
There are no new analyst updates relative to Laclede Group, Inc. according to Finviz.com.
I hope this dividend stock list helps investors as they do their own independent due diligence relative to identifying potentially undervalued dividend-paying stocks for 2014 with explosive sales growth.
*All rating information was sourced from the website FinViz.