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What follows is a list of companies that have PE ratios below 12 and dividend yields greater than 3.5%. These companies appear attractive in the sense that they provide an income investment to hedge against a double dip and considerable room for multiples expansion in the event of a recovery. They cover a variety of industries: integrated oil & gas, speciality retailing, REITs, and home construction.

The Street is currently bearish about all of the companies, save Gafisa (GFA). Fourth quarter results may be weak, but the company is appropriately de-risking the business by shifting away from Tenda and towards Alphaville. In addition, management is securitizing receivables to further limit cash flow burn. Based on my analysis, however, I find limited upside for all of the companies.

ConocoPhillips (COP)

ConocoPhillips is rated a "hold" and trades at 7.9x past and forward earnings with a dividend yield of 3.8%. It has a beta of 1.1.

Consensus estimates for ConocoPhillip's EPS forecast that it will decline by 5.6% to $8.27 in 2012, grow by 7.6% in 2013, and then decline by 8.6% in 2014. Assuming a multiple of 9.5x and a conservative 2013 EPS of $8.84, the rough intrinsic value of the stock is $83.98, implying 19.2% upside. The firm crushed fourth quarter expectations by $0.27 at an adjusted EPS of $2.02. In addition, management sold $1.5B worth of pipeline assets, which will add efficiency.

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RadioShack (RSH)

RadioShack is rated a "sell" and trades at a respective 7.5x and 5.5x past and forward earnings with a dividend yield of 6.8%. It has a beta of 1.6.

Consensus estimates for RadioShack's EPS forecast that it will decline by 47.6% to $0.88 in 2011, decline by 5.7% in 2012, and then grow by 9.6% in 2013. 21 revisions have been made downwards for a net change of -25.8%. Assuming a multiple of 10x and a conservative 2012 EPS of $0.79, the rough intrinsic value of the stock is $7.90, implying 6.9% upside. The retailer is experience erosion in ROIC, margins, and demand.

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Annaly Capital (NLY)

Annaly Capital is rated a "hold" and trades at a respective 8.9x and 7.5x past and forward earnings with a dividend yield of 13.3%. Assuming a multiple of 9x and a conservative 2012 EPS of $2.21, the rough intrinsic value of the stock is $19.86, implying 16% upside. The firm recently had to cut is dividend yield as a result of faster MBS prepayments.

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Gafisa

Gafis is rated a "buy" and trades at a respective 10.1x and 5.6x past and forward earnings with a dividend yield of 4.1%. It has a beta of 2.5.

Consensus estimates for Gafisa's EPS forecast that it will fall by 60.9% to $0.43 in 2011 and then grow by 79.1% and 46.8% in the following two years. Revisions to estimates have fallen for a net change of -9.5%. Assuming a multiple of 10x and a conservative 2012 EPS of $0.74, the rough intrinsic value of the stock is $7.40, implying 23.7% upside. As I stated earlier, the company's shift over to Alphaville and receivables securitization is being well received by analysts.

Source: 4 Cheap Dividend Plays With Limited Upside