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It is getting tougher to find value in this market after months of a significant rally. It is even harder to find good dividend stocks at reasonable prices. The Dow Jones Transportation Index (NYSEARCA:IYT) has significantly underperformed the overall market over the past three months (See Chart) and today's dividend selection comes from this unloved sector and it is a solid contrarian play. It is Ryder Systems (NYSE:R) and the company not only has a cheap valuation and a 3% yield, but also has recent some recent love from analysts and pundits.

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Recent positives for Ryder Systems:

  • SunTrust just upgraded the stock to a "buy" from "neutral" and put a $48 price target on R.
  • Cramer gave a shout out this week and is positive on Ryder's prospects.
  • It was initiated as a "buy" by Longbow in August with a $53 a share price target.
  • The company is showing some recent innovation getting into natural gas powered trucks and even producing a fleet specifically for Hollywood studios.

Ryder System provides transportation and supply chain management solutions throughout the United States.

5 additional reasons Ryder is a solid bargain at under $42 a share:

  1. The twelve analysts that cover the stock have a median price target of $54 on Ryder, some 30% above its current stock price.
  2. R yields a generous 3% yield and has raised its dividend payout at better than a 7% annual clip over the past five years.
  3. Earnings are rising at a consistent clip. Ryder earned $3.49 a share in FY2011 and is tracking towards $3.82 a share in FY2012. Analysts currently see it making 4.37 a share in FY2013.
  4. The stock is selling in the bottom third of its five year valuation range based on P/B, P/S and P/CF.
  5. Ryder is cheap at 9.6 forward earnings, a discount to its five year average (14.9). The stock sells for a very reasonable five year projected PEG (1.14) for a 3% yielder.
Source: Cramer And Other Analysts Start To Show This 3% Yielder Some Love