10 Low PE Stocks For The Enterprising Investor - February 2016

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Includes: BBBY, COF, DFS, F, KKR, LNC, NOV, PHM, STX, WNR
by: Benjamin Clark

Summary

These ten companies are all rated as suitable for the Enterprising Investor.

All ten are found to be significantly undervalued.

The ten companies are found to have the lowest PEmg ratios out of all companies which qualify for the Enterprising Investor.

There are a number of great companies in the market today. I've selected 10 low PE stocks for the Enterprising Investor. These companies have the lowest PEmg (price/normalized earnings) ratio out of all companies reviewed. Each company has been determined to be suitable for the Enterprising Investor and undervalued.

Defensive Investors are defined as investors who are not able or willing to do substantial research into individual investments, and therefore need to select only the companies that present the least amount of risk. Enterprising Investors, on the other hand, are able to do substantial research and can select companies that present a moderate (though still low) amount of risk.

Check out the history of this screen to find which companies have qualified in the past.

Seagate Technology PLC (NASDAQ:STX)

Seagate Technology PLC qualifies for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth or stability over the last ten years, the low current ratio, and the inconsistent dividend record. The Enterprising Investor is only initially concerned by the level of debt relative to the net current assets.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $2.39 in 2012 to an estimated $4.14 for 2016. This level of demonstrated earnings growth outpaces the market's implied estimate of 0.9% annual earnings loss over the next 7-10 years.

National-Oilwell Varco, Inc. (NYSE:NOV)

National Oilwell Varco Inc. qualifies for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the short dividend record, and the insufficient earnings growth over the last ten years. The Enterprising Investor has no initial concerns.

As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $4.24 in 2011 to an estimated $4.51 for 2015. This level of demonstrated earnings growth supports the market's implied estimate of 0.06% annual earnings growth over the next 7-10 years.

Ford Motor Company (NYSE:F)

Ford Motor Company qualifies for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth or stability over the last ten years, and the inconsistent dividend history. The Enterprising Investor has no initial concerns.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.30 in 2011 to an estimated $1.60 for 2015. This level of demonstrated earnings growth outpaces the market's implied estimate of 0.29% annual earnings loss over the next 7-10 years.

PulteGroup, Inc. (NYSE:PHM)

PulteGroup Inc qualifies for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth or stability over the last ten years along with the inconsistent dividend history. The Enterprising Investor is only concerned by the insufficient earnings stability over the last five years.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from a loss of $3.12 in 2011 to an estimated gain of $2.10 for 2015. This level of demonstrated earnings growth outpaces the market's implied estimate of 0.21% annual earnings loss over the next 7-10 years.

Western Refining, Inc. (NYSE:WNR)

Western Refining Inc. qualifies for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years as well as the inconsistent dividend record. The Enterprising Investor is only concerned by the level of debt relative to the net current assets.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from a loss of $0.13 in 2011 to an estimated gain of $3.98 for 2015. This level of demonstrated earnings growth outpaces the market's implied estimate of 0.98% annual earnings growth over the next 7-10 years.

Lincoln National Corporation (NYSE:LNC)

Lincoln National Corp qualifies for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years. The Enterprising Investor has no initial concerns.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $0.80 in 2011 to an estimated $4.65 for 2015. This level of demonstrated earnings growth outpaces the market's implied estimate of 1.59% annual earnings growth over the next 7-10 years.

Bed Bath & Beyond Inc. (NASDAQ:BBBY)

Bed Bath & Beyond Inc. qualifies for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio and lack of dividends. The Enterprising Investor is only initially concerned by the lack of dividends.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $2.99 in 2012 to an estimated $4.88 for 2015. This level of demonstrated earnings growth outpaces the market's implied estimate of 1.29% annual earnings growth over the next 7-10 years.

Capital One Financial Corp. (NYSE:COF)

Capital One Financial Corp qualifies for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years along with the inconsistent dividend record. The Enterprising Investor has no initial concerns.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $5.15 in 2012 to an estimated $7.17 for 2016. This level of demonstrated earnings growth outpaces the market's implied estimate of 0.28% annual earnings loss over the next 7-10 years.

KKR & Co. L.P. (NYSE:KKR)

KKR & Co. LP qualifies for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor has concerns regarding the company's short history as a publicly traded entity while the Enterprising Investor has no initial concerns.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $0.44 in 2011 to an estimated $1.48 for 2015. This level of demonstrated earnings growth outpaces the market's implied estimate of 1.57% annual earnings growth over the next 7-10 years.

Discover Financial Services (NYSE:DFS)

Discover Financial Services Inc. qualifies for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the short dividend record. The Enterprising Investor has no initial concerns.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $2.49 in 2011 to an estimated $4.89 for 2015. This level of demonstrated earnings growth outpaces the market's implied estimate of 1.53% annual earnings growth over the next 7-10 years.

Disclosure: I am/we are long F, WNR.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.