Basic material dividend stocks with low forward P/E's originally published at "long-term-investments.blogspot.com". Yesterday I read an interesting article about the valuation of the market. We got a gaining momentum. This year alone, the market rose around 15 percent and nobody scares this. The analysts from Bloomberg attempted to compare the situation with the second half of the 90ies where stocks started to boost until they burst. Historically we named this burst the technology bubble 2000.
The analyst wrote that the current valuation is still 28 below the mid 90ies. The market is not cheap but not expensive. Other investors talk about a reasonable pricing. They trust the market environment and the FED stimulus and they pay finally the high price.
I'm a long-term growth investor and I've also realized that most of the high-quality stocks are too expensive to get a good return. With P/E's of 20 you will definitely make no greater return. Sure, it could be possible that your investment got a 30 P/E in five years or so but that's not investing, it's speculation.
As you might have seen, I started more screens with cheap price ratios as variables. I still try to seek the cheapest opportunities from the market, but there are only a dozen from each sector. Today I like to discover some ideas from the basic material sector. I'm focused on large caps in my screen.
Basic material stocks are still very cheap. The 20 stocks with lowest valuation can be purchased for a multiple between 4 and 9 of expected earnings. That's very low compared to my other screens. But you should also know that valuation is a question of belief - Do you trust the earnings forecasts?
Here is the full table with some fundamentals:
Take a closer look at the full list. The average P/E ratio amounts to 10.13 and forward P/E ratio is 7.42. The dividend yield has a value of 2.77 percent. Price to book ratio is 1.31 and price to sales ratio 1.09. The operating margin amounts to 15.70 percent and the beta ratio is 1.31. Stocks from the list have an average debt to equity ratio of 0.44.
Related stock ticker symbols:
GGB, ABX, RIO, VLO, CEO, VALE, MPC, TOT, PKX, SNP, FCX, BP, ESV, PBR, PBR-A, CF, STO, IMO, APA, PSX