While it's always fun to ride a stock higher, especially in poor market conditions, losing sight of an exit point is often a dangerous, accidental game of chicken. Recently, we've noticed that some dividend stocks are flying higher and higher, but the danger now is that their valuations may have gotten to high. We understand that no investor generally wants to sell an amazing winner, especially if it's a dividend stock because of the added dividend benefits, but now is the time to review these names, because the goal of investing will always be to buy low and sell high.
The Price/Book Value Ratio is a great price-multiple valuation metric to find companies that may be potentially undervalued or overvalued. If a firm has a Price/Book Value Ratio of less than 1 it is stated to be trading below “break up” value. A lower P/BV Ratio can indicate a potentially mispriced company or indicate that something is fundamentally wrong with it.
We first looked for dividend stocks trading at a premium (P/BV Ratio > 4). From this narrowed list of candidates, we then looked for companies that are trading near their 52-week lows. We did not screen out any sectors or market caps.
The list is ranked from highest to lowest by the P/BV Ratio:
1. Philip Morris International (PM)
Sector | Consumer Defensive |
Industry | Tobacco |
Market Cap | $122,727M |
Beta | 0.84 |
The company makes and sells cigarettes and tobacco products outside the US. The company has a dividend yield of 3.85% and a P/BV ratio of 33.44. PM is 3.95% above its 52-week low. The short interest was 0.90% as of 10/14/2011.
2. Limited Brands, Inc. (LTD)
Sector | Consumer Cyclical |
Industry | Apparel Stores |
Market Cap | $12,741M |
Beta | 1.60 |
The company sells women's intimate apparel, clothes, and accessories. The company has a dividend yield of 1.76% and a P/BV ratio of 20.37. LTD is 6.03% above its 52-week low. The short interest was 3.70% as of 10/14/2011.
3. Colgate-Palmolive Company. (CL)
Sector | Consumer Defensive |
Industry | Household and Personal Products |
Market Cap | $43,739M |
Beta | 0.50 |
The company offers a variety of home and household products. The company has a dividend yield of 2.51% and a P/BV ratio of 16.39. CL is 4.76% above its 52-week low. The short interest was 1.20% as of 10/14/2011.
4. Linear Technology. (LLTC)
Sector | Technology |
Industry | Semiconductors |
Market Cap | $7,488M |
Beta | 0.99 |
The company designs and sells linear integrated circuits. The company has a dividend yield of 2.94% and a P/BV ratio of 14.81. LLTC is 16.81% above its 52-week low. The short interest was 7.30% as of 10/14/2011.
5. The Hershey Company. (HSY)
Sector | Consumer Defensive |
Industry | Confectioners |
Market Cap | $13,016M |
Beta | 0.29 |
The company sells quality chocolate and non-chocolate products. The company has a dividend yield of 2.37% and a P/BV ratio of 12.85. HSY is 6.12% above its 52-week low. The short interest was 4.20% as of 10/14/2011.
6. Altria Group Inc. (MO)
Sector | Consumer Defensive |
Industry | Tobacco |
Market Cap | $56,654M |
Beta | 0.43 |
The company operates Philip Morris USA. The company has a dividend yield of 5.63% and a P/BV ratio of 12.82. MO is 2.10% above its 52-week low. The short interest was 1.40% as of 10/14/2011.
7. Herbalife, Ltd. (HLF)
Sector | Consumer Defensive |
Industry | Household and Personal Products |
Market Cap | $7,380M |
Beta | 1.85 |
The company does network marketing for nutritional supplement, weight management, and personal care products. The company has a dividend yield of 1.04% and a P/BV ratio of 12.38. HLF is 1.64% above its 52-week low. The short interest was 3.10% as of 10/14/2011.
8. Yum Brands Inc. (YUM)
Sector | Consumer Cyclical |
Industry | Restaurants |
Market Cap | $24,669M |
Beta | 0.86 |
The company operates a variety of quick-service restaurants around the world. The company has a dividend yield of 1.93% and a P/BV ratio of 12.38. YUM is 7.24% above its 52-week low. The short interest was 1.50% as of 10/14/2011.
9. Coach, Inc. (COH)
Sector | Consumer Cyclical |
Industry | Luxury Goods |
Market Cap | $18,807M |
Beta | 1.58 |
The company sells fine accessories for men and women. The company has a dividend yield of 1.15% and a P/BV ratio of 11.67. COH is 5.97% above its 52-week low. The short interest was 1.30% as of 10/14/2011.
10. Accenture PLC. (ACN)
Sector | Industrials |
Industry | Business Services |
Market Cap | $41,586M |
Beta | 0.80 |
The company offers technology services, management consulting, and outsourcing organization. The company has a dividend yield of 1.87% and a P/BV ratio of 10.72. ACN is 5.34% above its 52-week low. The short interest was 1.90% as of 10/14/2011.
We hope this list helps as investors do their own due diligence and research on bullish stocks with expensive price-multiple valuations.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
