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A List of Low Price to Earnings Stocks with “Safe” Altman Z-Scores

In order to choose stocks that are cheap but are at low risk of bankruptcy, we need a quantitative predictor of credit risk. Fortunately, the Altman Z-Score can help distinguish value investments from value traps.

The Altman Z-score places companies into three groups: “safe” (Z-score > 2.99), “grey” (Z-score between 2.99 and 1.81) and “distressed*” (Z-score < 1.81). This metric is surprisingly useful for identifying bankruptcy risk in the coming year. Atlman’s method of segmenting companies uses fundamental (financial statement) data and market capitalization only.** Beyond credit risk prediction, companies with higher Z-scores have been shown to outperform companies with lower Z-scores, in aggregate.

The Altman Z-score was recently calculated for hundreds of companies with P/E multiples at or below 10. Low P/E companies which scored in the “safe” zone are presented with below:

Ticker

Company

Altman Z-score

P/E

P/B

ISIG

Insignia Systems Inc.

9.38

0.59

0.97

BSET

Bassett Furniture Industries Inc.

4.04

1.61

0.56

CHNR

China Natural Resources Inc.

198.66

1.81

2.19

WSTL

Westell Technologies Inc.

4.85

1.9

0.86

KGJI

Kingold Jewelry, Inc.

13.65

2

0.49

EDS

Exceed Company Ltd.

4.46

2.06

0.41

SFE

Safeguard Scientifics, Inc.

4.20

2.15

0.9

PCO

Pendrell Corporation

3.65

2.19

2.49

MAXY

Maxygen, Inc.

24.47

2.47

0.92

INTT

inTEST Corp.

6.03

2.78

1.15

USMO

USA Mobility, Inc.

3.80

2.82

1.29

AERL

Asia Entertainment & Resources

11.65

2.95

1.74

PDEX

Pro-Dex Inc.

3.69

3.08

0.78

LGL

The LGL Group, Inc.

3.34

3.38

0.72

OME

Omega Protein Corp.

3.07

3.49

0.72

DEPO

DepoMed Inc.

5.84

3.56

2.57

ASYS

Amtech Systems Inc.

3.16

3.77

0.72

CECO

Career Education Corp.

3.04

3.79

0.62

PWER

Power-One Inc.

3.62

4.01

1.1

MSN

Emerson Radio Corp.

4.54

4.09

0.79

MNTA

Momenta Pharmaceuticals

35.87

4.26

2.37

VC

Visteon Corp.

3.19

4.47

1.99

JOUT

Johnson Outdoors Inc.

3.69

4.62

0.93

ISSI

Integrated Silicon Solution Inc.

3.99

4.67

1.05

RBCN

Rubicon Technology, Inc.

7.15

4.67

1.01

VGZ

Vista Gold Corp.

3.78

4.88

1.63

TSO

Tesoro Corporation

4.18

4.91

0.84

LINC

Lincoln Educational Services

3.52

4.95

0.73

BRKS

Brooks Automation Inc.

3.12

5.12

1.3

NC

Nacco Industries Inc.

3.41

5.17

1.38

VLO

Valero Energy Corporation

3.95

5.21

0.68

SHS

Sauer-Danfoss Inc.

4.58

5.24

3.42

OVTI

OmniVision Technologies Inc.

3.57

5.29

0.88

AT

Atlantic Power Corporation

4.45

5.31

2.53

NX

Quanex Building Products

4.77

5.36

1.34

BTN

Ballantyne Strong, Inc

3.59

5.47

0.99

ESI

ITT Educational Services Inc.

8.33

5.61

13.27

SLI

SL Industries Inc.

4.41

5.66

1.31

DDS

Dillard's Inc.

3.19

5.79

1.1

MDCO

Medicines Co.

5.11

5.91

2.07

AOSL

Alpha & Omega Semiconductor, Ltd.

3.05

5.97

0.69

KLIC

Kulicke & Soffa Industries Inc.

4.48

5.97

1.6

ARCI

Appliance Recycling Centers of America

3.55

6.01

1.82

POWR

PowerSecure International, Inc.

3.12

6.08

0.92

CMT

Core Molding Technologies Inc.

3.82

6.14

1.26

LMLP

LML Payment Systems Inc.

5.83

6.23

1.74

OTCPK:KRSL

Kreisler Manufacturing Corp.

4.98

6.25

0.45

RCKY

Rocky Brands, Inc.

3.06

6.25

0.61

CLRO

ClearOne Communications Inc.

4.37

6.28

1.02

SEB

Seaboard Corp.

5.32

6.28

1.14

LYB

LyondellBasell Industries NV

3.86

6.32

1.4

ENTR

Entropic Communications, Inc.

18.21

6.34

1.58

GLPW

Global Power Equipment Group Inc.

6.61

6.36

1.48

TCCO

Technical Communications Corp.

9.57

6.36

1.05

KRA

Kraton Performance Polymers Inc.

3.08

6.37

1.35

GLW

Corning Inc.

3.44

6.41

0.98

DIT

AMCON Distributing Co.

11.54

6.43

0.89

GCI

Gannett Co., Inc.

3.34

6.47

1.32

AXTI

AXT Inc.

4.78

6.5

1.05

TIII

Tii Network Technologies, Inc.

3.43

6.5

0.48

AM

American Greetings Corp.

3.19

6.52

0.68

CVI

CVR Energy, Inc.

4.39

6.52

1.68

OBCI

Ocean Bio-Chem Inc.

3.59

6.65

1.23

AE

Adams Resources & Energy Inc.

9.51

6.74

1.28

SR

The Standard Register Company

3.06

6.74

1.34

CRUS

Cirrus Logic Inc.

8.80

6.76

2.72

FCX

Freeport-McMoRan Copper & Gold

3.45

6.8

2.4

UCTT

Ultra Clean Holdings Inc.

5.32

7.01

1.26

AFAM

Almost Family Inc.

4.92

7.13

0.8

BDL

Flanigan's Enterprises Inc.

3.22

7.15

0.72

CVH

Coventry Health Care Inc.

3.02

7.17

0.94

KEYN

Keynote Systems Inc.

6.79

7.28

1.56

AVT

Avnet Inc.

4.30

7.34

1.21

SAH

Sonic Automotive Inc.

4.07

7.36

1.53

ARW

Arrow Electronics, Inc.

3.55

7.38

1.16

SVT

Servotronics Inc.

4.56

7.38

0.89

VSR

Versar Inc.

4.42

7.49

0.93

BPI

Bridgepoint Education, Inc.

7.30

7.52

3.64

NCIT

NCI, Inc.

3.91

7.53

0.9

DK

Delek US Holdings Inc.

4.08

7.55

1.03

FRX

Forest Laboratories Inc.

6.10

7.57

1.58

MEA

Metalico Inc.

3.19

7.58

0.83

AMAT

Applied Materials Inc.

5.01

7.59

1.64

NUTR

Nutraceutical International Corp.

4.00

7.61

0.97

NANO

Nanometrics Incorporated

6.91

7.64

2.02

DO

Diamond Offshore Drilling Inc.

3.75

7.7

1.84

PATK

Patrick Industries Inc.

3.62

7.82

1.64

LRCX

Lam Research Corporation

4.93

7.85

1.93

SFD

Smithfield Foods Inc.

3.48

7.86

1.1

FN

Fabrinet

5.83

7.88

1.59

OPLK

Oplink Communications Inc.

6.58

7.9

1.14

UPG

Universal Power Group Inc.

3.77

7.93

0.47

DELL

Dell Inc.

3.46

7.95

3.18

AVCA

Advocat Inc.

3.44

7.97

1.19

LXK

Lexmark International Inc.

3.16

7.99

1.69

VASC

Vascular Solutions Inc.

13.00

8

2.51

CVX

Chevron Corporation

4.55

8.03

1.78

ANDE

The Andersons, Inc.

4.58

8.04

1.52

AEIS

Advanced Energy Industries, Inc.

4.71

8.17

1.13

SED

SED International Holdings, Inc.

4.13

8.17

0.57

WNR

Western Refining Inc.

4.12

8.19

1.5

IXYS

IXYS Corp.

4.85

8.2

1.43

CBOU

Caribou Coffee Company, Inc.

6.83

8.24

2.91

SNX

SYNNEX Corp.

5.37

8.27

1

PDLI

PDL BioPharma, Inc.

5.16

8.28

0

GIII

G-III Apparel Group, Ltd.

3.43

8.32

1.31

ATML

Atmel Corporation

7.29

8.37

3.46

NSIT

Insight Enterprises Inc.

4.82

8.47

1.28

BBY

Best Buy Co. Inc.

4.03

8.5

1.38

NAFC

Nash Finch Co.

5.60

8.5

0.88

FRD

Friedman Industries Inc.

8.16

8.53

1.27

AEY

ADDvantage Technologies Group

3.77

8.54

0.61

MANT]

ManTech International Corporation

3.89

8.55

1.1

DEST

Destination Maternity Corporation

4.92

8.56

2.14

STRN

Sutron Corp.

6.30

8.56

1.25

MOS

The Mosaic Company

6.10

8.58

1.93

DLA

Delta Apparel Inc.

3.39

8.62

1.12

AVX

AVX Corp.

8.35

8.64

1.02

CF

CF Industries Holdings, Inc.

3.15

8.69

2.46

SWC

Stillwater Mining Co.

3.68

8.69

1.57

MLR

Miller Industries Inc.

4.81

8.76

1.13

LZB

La-Z-Boy Inc.

4.60

8.8

1.52

TESS

TESSCO Technologies Inc.

5.44

8.87

1.26

ZINC

Horsehead Holding Corp.

3.19

8.87

1.03

SMRT

Stein Mart Inc.

4.08

8.88

1.11

ADM

Archer Daniels Midland Company

3.66

8.89

1.06

GPRE

Green Plains Renewable Energy

3.12

8.94

0.66

WLK

Westlake Chemical Corp.

3.89

9

1.64

TNAV

TeleNav, Inc.

6.32

9.04

1.66

AMOT

Allied Motion Technologies Inc.

4.14

9.05

1.34

HNRG

Hallador Energy Company

4.36

9.05

1.85

MASC

Material Sciences Corp.

4.73

9.06

1.24

WBC

WABCO Holdings Inc.

4.45

9.1

5.15

GME

GameStop Corp.

3.53

9.11

1.16

KRO

Kronos Worldwide Inc.

3.71

9.19

2.83

CRWS

Crown Crafts Inc.

5.20

9.22

1.12

DST

DST Systems Inc.

3.06

9.22

2.92

BG

Bunge Limited

3.46

9.24

0.73

CO

China Cord Blood Corporation

12.76

9.24

1

DV

DeVry, Inc.

5.61

9.24

2.01

KBR

KBR, Inc.

3.51

9.26

1.68

COP

ConocoPhillips

3.15

9.3

1.47

FEIM

Frequency Electronics Inc.

4.16

9.31

0.9

TKR

Timken Co.

4.06

9.33

1.8

CTCM

CTC Media, Inc

6.48

9.35

1.88

IRF

International Rectifier Corporation

4.70

9.35

1.04

SUP

Superior Industries International

5.32

9.35

1.08

EBF

Ennis Inc.

4.23

9.37

0.98

WYY

WidePoint Corp.

3.36

9.38

2.14

NOC

Northrop Grumman Corporation

3.06

9.4

1.29

FLXS

Flexsteel Industries Inc.

5.70

9.42

0.73

LLY

Eli Lilly & Co.

3.72

9.52

3.07

PAAS

Pan American Silver Corp.

122.56

9.53

1.53

JCTCF

Jewett-Cameron Trading Co. Ltd.

7.95

9.55

1.42

CRDN

Ceradyne Inc.

4.09

9.56

1.01

VCI

Valassis Communications Inc.

3.24

9.58

1.91

UFI

Unifi Inc.

3.64

9.6

0.51

SUSS

Susser Holdings Corporation

5.43

9.62

1.52

TQNT

TriQuint Semiconductor, Inc.

5.55

9.62

0.86

GSIT

GSI Technology Inc.

7.12

9.74

1

KLAC

KLA-Tencor Corporation

5.84

9.78

2.71

MFB

Maidenform Brands, Inc.

4.54

9.78

1.8

JCS

Communications Systems Inc.

7.46

9.81

1.22

KAI

Kadant Inc.

3.30

9.84

1.2

USNA

USANA Health Sciences Inc.

8.39

9.9

2.93

ATW

Atwood Oceanics, Inc.

3.96

9.93

1.62

AIRT

Air T Inc.

6.01

9.95

0.77

RSH

RadioShack Corp.

4.45

9.95

1.23

CASC

Cascade Corp.

6.24

9.96

1.77

DAR

Darling International Inc.

3.99

9.99

1.74

CCIX

Coleman Cable, Inc.

3.08

10

6.07

GMAN

Gordmans Stores, Inc.

5.33

10

3.48

The companies on this list are value buys that have a low probability of bankruptcy. A diversified portfolio of 30 or more of these stocks should offer attractive risk-adjusted returns. On an individual stock basis, additional research is warranted.

*“Distressed” was a label coined by researchers, and should not be taken to mean that any company is bankrupt or in default on the basis of this calculation alone. Credit scoring is not fate, only prediction based on relative past performance of companies grouped by key variables. Time will tell.

**Volatility has be incorporated into a credit scoring model to improve accuracy, but this would reduce the value of a fundamentals-only model for indicating companies for option strategies.

Disclaimer: This article was written to provide investor information and education, and should not be construed as a guarantee or investment advice. I have no idea what your individual risk, time-horizon, and tax circumstances are: please seek the personal advice of a financial planner. This article uses third-party data and may contain approximations and errors. Please check estimates and data for yourself before investing.

Source: 2012's Low P/E Stocks