Looking to Gain? Consider This

Includes: FITB, HD, KO, PFE
by: Richard Shaw

One approach to stock selection is to find stocks with valuation ratios below their normal valuation. Not all will revert to their normal levels, but some will. Beginning research from a list of those companies that have the potential to revert is a reasonable thing to do.

Here is a list of the 11 companies that [as of 12/01/2006] had a yield of 2% or more, market capitalization of $1 billion or more, and whose P/Div, P/E and P/B are each at least 20% below their 5-year average levels.

Some of these may provide opportunity for gain, based on return to their 5-year average valuation ratios.

There are surely winners and losers in this list – more examination is required to say which may be which. The companies are listed in descending order of market capitalization.

click to enlarge

stocks valuation ratio below normal valuation

Disclosure: Author does not own any of the above-mentioned stocks.