Good investment indicators
Primarily it’s a question of your investment
philosophy or screening criteria. I am focused on dividend stocks with great
yields, strong market positions and low limitations to grow. I also invest into
stocks with no yields or low dividend payments.
Don’t look at the yield alone
The dividend yield is only an expression and
should never be a single investment criterion. I know so many people who only
look at the P/E ratio and the dividend yield and argue that the stock is cheap
at a P/E below 10. That’s too easy. If the company has no debt, you should look
the enterprise value.
Growth is the value driver
More important is growth. If a company doubles
every 3 years sales and earnings, it’s normal that the stock is highly
valuated. Stock valuation is a very complex area.
Today I like to screen some opportunities from
the basic material sector. 595 stocks are available with a relationship to the
raw material sector – nearly 300 of them pay dividends. The average sector P/E ratio
amounts to 11.08 at a yield of 2.98 percent.
I screened large capitalized stocks with very high
expected earnings per share growth for the next five years (over 10 percent) and
a low forward P/E ratio of less than 15. Seventeen stocks fulfilled my criteria
of which twelve are currently recommended to buy. Two High-Yields are below the
results.
Here are my favorite stocks:
Here are my favorite stocks:
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Southern Copper (NYSE:SCCO) has a market capitalization of $33.82 billion. The company employs 12,145 people, generates revenue of $6.818 billion and has a net income of $2.344 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $3.913 billion. The EBITDA margin is 57.39 percent (the operating margin is 53.17 percent and the net profit margin 34.38 percent).
Financial Analysis: The total debt represents 34.05 percent of the company’s assets and the total debt in relation to the equity amounts to 68.38 percent. Due to the financial situation, a return on equity of 59.11 percent was realized. Twelve trailing months earnings per share reached a value of $2.29. Last fiscal year, the company paid $2.46 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 17.49, the P/S ratio is 4.96 and the P/B ratio is finally 8.38. The dividend yield amounts to 9.40 percent and the beta ratio has a value of 1.60.
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| Long-Term Stock History Chart Of Southern Copper (SCCO) |
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| Long-Term Dividends History of Southern Copper (SCCO) |
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| Long-Term Dividend Yield History of Southern Copper (SCCO) |
Seadrill (NYSE:SDRL) has a market capitalization of $17.80 billion. The company employs 7,600 people, generates revenue of $4.192 billion and has a net income of $1.482 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $2.337 billion. The EBITDA margin is 55.75 percent (the operating margin is 42.32 percent and the net profit margin 35.35 percent).
Financial Analysis: The total debt represents 56.97 percent of the company’s assets and the total debt in relation to the equity amounts to 174.47 percent. Due to the financial situation, a return on equity of 24.63 percent was realized. Twelve trailing months earnings per share reached a value of $2.23. Last fiscal year, the company paid $3.06 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 17.01, the P/S ratio is 4.26 and the P/B ratio is finally 2.98. The dividend yield amounts to 8.94 percent and the beta ratio has a value of 2.01.
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| Long-Term Stock History Chart Of Seadrill (SDRL) |
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| Long-Term Dividends History of Seadrill (SDRL) |
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| Long-Term Dividend Yield History of Seadrill (SDRL) |
Schlumberger (NYSE:SLB) has a market capitalization of $104.44 billion. The company employs 118,000 people, generates revenue of $42.321 billion and has a net income of $5.468 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $10.762 billion. The EBITDA margin is 25.43 percent (the operating margin is 16.99 percent and the net profit margin 12.92 percent).
Financial Analysis: The total debt represents 18.90 percent of the company’s assets and the total debt in relation to the equity amounts to 33.47 percent. Due to the financial situation, a return on equity of 16.48 percent was realized. Twelve trailing months earnings per share reached a value of $4.06. Last fiscal year, the company paid $1.10 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 19.38, the P/S ratio is 2.46 and the P/B ratio is finally 3.00. The dividend yield amounts to 1.59 percent and the beta ratio has a value of 1.42.
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| Long-Term Stock History Chart Of Schlumberger (SLB) |
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| Long-Term Dividends History of Schlumberger (SLB) |
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| Long-Term Dividend Yield History of Schlumberger (SLB) |
Halliburton (NYSE:HAL) has a market capitalization of $37.90 billion. The company employs 70,000 people, generates revenue of $28.503 billion and has a net income of $2.587 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $5.787 billion. The EBITDA margin is 20.30 percent (the operating margin is 14.59 percent and the net profit margin 9.08 percent).
Financial Analysis: The total debt represents 17.58 percent of the company’s assets and the total debt in relation to the equity amounts to 30.57 percent. Due to the financial situation, a return on equity of 17.80 percent was realized. Twelve trailing months earnings per share reached a value of $2.78. Last fiscal year, the company paid $0.36 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 14.71, the P/S ratio is 1.33 and the P/B ratio is finally 2.40. The dividend yield amounts to 0.88 percent and the beta ratio has a value of 1.61.
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| Long-Term Stock History Chart Of Halliburton (HAL) |
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| Long-Term Dividends History of Halliburton (HAL) |
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| Long-Term Dividend Yield History of Halliburton (HAL) |
Take a closer look at the full list of cheap growth stocks from the raw material sector. The average P/E ratio amounts to 14.11
and forward P/E ratio is 10.89. The dividend yield has a value of 2.46 percent.
Price to book ratio is 2.16 and price to sales ratio 1.90. The operating margin
amounts to 18.06 percent and the beta ratio is 1.54. Stocks from the list have
an average debt to equity ratio of 0.54.
Here is the full table with some fundamentals (TTM):
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| Cheap Basic Material Dividend Stocks (Click to enlarge) |
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Related stock ticker symbols:
SDRL, EC, MT,
PTR, SCCO, ESV, MUR, GGB, VLO, SLB, PSX, CNQ, TS, PKX, HAL, NOV, DO
Selected Articles:
* I
have no positions in any stocks mentioned, and no plans to initiate any
positions within the next 72 hours. I receive no compensation to write about
any specific stock, sector or theme.