Seeking Alpha
, YCharts (561 clicks)
Long/short equity, dividend investing, value, deep value
Profile| Send Message|
( followers)  

Summary

  • Halfway through 2014, stocks are looking pricier.
  • As investors who choose individual stocks mull the taking of profits, eating of losses and some judicious rebalancing, it’s worth asking very broadly: what’s still cheap?
  • Rather than search for super-low-priced shares at this point, we’re looking at the S&P 500 components and using the YCharts Stock Screener to sort out companies trading at a forward PE ratio of below 15.

By Jeff Bailey

Halfway through 2014, stocks are looking pricier. As investors who choose individual stocks mull the taking of profits, eating of losses and some judicious rebalancing, it’s worth asking very broadly: what’s still cheap?

^SPX Chart

^SPX data by YCharts

Rather than search for super-low-priced shares at this point, we’re looking at the S&P 500 components and using the YCharts Stock Screener to sort out companies trading at a forward PE ratio of below 15. That gives us a pretty big list, ordered by market cap here and also featuring dividend yield and payout ratio. There are 125 stocks in all.

And it turns out, with YCharts’ focus on value investing, we’ve written about a fair number of these stocks during the last six months.

Oh sure, we’ve spent some time on the new and the fizzy, including the upcoming IPO of self-driving-car systems concern Mobileye (NYSE:MBLY); a look at the slowing growth of LinkedIn (NYSE:LNKD); the iffy valuation of Twitter (NYSE:TWTR); the hiring binge at Amazon (NASDAQ:AMZN); dis-economies of scale at Salesforce.com (NYSE:CRM); and a look at the self-serving and arrogant touting of software-as-a-service stocks, like Workday (NYSE:WDAY), by the venture capital firm, Andreessen Horowitz, which has a bunch of money sunk into such companies.

But mostly, YCharts' articles drill down into the world of value investing, delving into dividend growth and the attractiveness of companies with wide competitive moats. Our articles aren’t aimed at short-term plays, but rather seek to unearth information that can help you form long-term conclusions. So, a little recap here is hopefully of use.

The sub-15 forward PE ratio stocks, as of today, include a good sampling of retailers, financial companies, energy concerns, tech stocks, healthcare companies, defense firms and others.

We wrote admiringly about PetSmart (NASDAQ:PETM), a stock languishing as it tries to fix some operational issues. The company is well positioned to take advantage of affluent Americans’ love affair with animals, however. We also shined up GameStop (NYSE:GME), a favorite among short sellers who see a bricks-and-mortar video game retailer as an anachronism despite GameStop’s continuing financial success. We weren’t so kind to Staples (NASDAQ:SPLS). Its turnaround efforts notwithstanding, Staples faces a younger workforce that seems not to use many office supplies.

My colleague Erik Kobayashi-Solomon, meanwhile, in one of his YCharts 1% Focus Reports, found surprising demographic trouble facing Kohl’s (NYSE:KSS).

PETM PE Ratio (Forward) Chart

PETM PE Ratio (Forward) data by YCharts

In the defense industry, Lockheed (NYSE:LMT), Raytheon (NYSE:RTN) and Northrop Grumman (NYSE:NOC) were among stocks cited in Dee Gill’s article in March. The companies, despite a slowdown in defense spending, have rewarded investors mightily with a combination of stock buybacks and dividend hikes. They are in the sub-15 club right now, too.

LMT Shares Outstanding Chart

LMT Shares Outstanding data by YCharts

Kobayashi-Solomon of YCharts singled out healthcare stocks as generally expensive early in the year in one of his YCharts 10% Sector Reports. It’s understandable. What other sector of the economy seems immune to economic problems or widespread efforts by public- and private-sector insurers to bring spending down? But among the big stocks in the sector, Carla Fried was compelled to write about the stunning dividend growth of UnitedHealth Group (NYSE:UNH). The UnitedHealth payout ratio remains modest and the forward PE ratio, though climbing, sits beneath 15.

UNH Dividend Chart

UNH Dividend data by YCharts

We’ll be back with more of a mid-year examination of inexpensive stocks after the holiday.

Disclosure: None

Source: Mid-Year Report: Not All Stocks Overpriced