These are
tough times for investors who look for cheap companies. The Dow and S&P 500
jump from high to high, but this boom is credit-driven; it's the result of the
monetary easing policy of the world's major government banks.
The good
thing is that we can buy stocks in every market situation, whether the market
has a P/E level of 30 or 10. What we need to is to look at solid growth for the
single stock and not overpay for the future prospects of an asset.
When I look
at the market today, I see that the financial sector, conglomerates and basic
material stocks are the cheapest valued ones in terms of forward P/E, but the
highest growth is predicted for the Services and Technology sector, both of
which have the highest P/E ratios.
Tech stocks
have made many people rich, but if you recall the dot.com bubble in 2000, many
investors and private dealers lost their money because they believed that their
super high-flying stock could change the world.
Facebook, Twitter and Google dominate our world today, but will they do it in 10 or 20 years too? For sure,
Microsoft has survived over 40 years. Oracle, IBM and even Apple also developed into dominant players and
created a long track record, but technology is a fast changing business. You
can make billions in a year, but also lose all your money in the next
half-decade.
I own some
of the old-school technology stocks too, but I don't like to pay for the
uncertain future of a company more than it makes sense in an economic view. I
will not pay 500 times sales today because of the company's next revolutionary
product if I don’t understand how it works.
I want
dividends and a fair chance to make an 8 percent or more return, nothing else.
The market has enough opportunities to realize this goal, and it is easy to
succeed.
I've found
a new screener on Morningstar, but it seems only to work with Canadian and US
stocks. Morningstar has a great classification of companies, from financially
healthy to growth, so I tested it.
Today, I
was looking for fairly valuated growth stocks with a good dividend yield. In
addition, 5-year expected earnings growth had to be over 8 percent. The screen
delivered 25 results, and my focus is still on consumer stocks, as well as
non-cyclical dividend payers.
Below are 5
of my favorite picks. Do you like some of them? Please let me know what you
think from the screen.
Verizon (NYSE:VZ) has a market capitalization of $204.90 billion. The company employs 176,800 people, generates revenue of $120.550 billion and has a net income of $23.547 billion. Verizon’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $42.064 billion. The EBITDA margin is 34.89 percent (the operating margin is 26.52 percent and the net profit margin 19.53 percent).
Financial Analysis: The total debt represents 34.15 percent of Verizon’s assets and the total debt in relation to the equity amounts to 240.99 percent. Due to the financial situation, a return on equity of 31.94 percent was realized by Verizon. Twelve trailing months earnings per share reached a value of $4.71. Last fiscal year, Verizon paid $2.08 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 10.50, the P/S ratio is 1.70 and the P/B ratio is finally 3.64. The dividend yield amounts to 4.29 percent and the beta ratio has a value of 0.41.
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| Long-Term Stock Price Chart Of Verizon (VZ) |
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| Long-Term Dividend Payment History of Verizon (VZ) |
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| Long-Term Dividend Yield History of Verizon (VZ) |
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Exelon (NYSE:EXC) has a market capitalization of $28.16 billion. The company employs 26,057 people, generates revenue of $24.888 billion and has a net income of $1.729 billion. Exelon’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $5.799 billion. The EBITDA margin is 23.30 percent (the operating margin is 14.69 percent and the net profit margin 6.95 percent).
Financial Analysis: The total debt represents 25.18 percent of Exelon’s assets and the total debt in relation to the equity amounts to 87.77 percent. Due to the financial situation, a return on equity of 7.77 percent was realized by Exelon. Twelve trailing months earnings per share reached a value of $2.14. Last fiscal year, Exelon paid $1.46 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 15.40, the P/S ratio is 1.13 and the P/B ratio is finally 1.24. The dividend yield amounts to 3.78 percent and the beta ratio has a value of 0.51.
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| Long-Term Stock Price Chart Of Exelon (EXC) |
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| Long-Term Dividend Payment History of Exelon (EXC) |
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| Long-Term Dividend Yield History of Exelon (EXC) |
General Electric (NYSE:GE) has a market capitalization of $262.19 billion. The company employs 307,000 people, generates revenue of $146.045 billion and has a net income of $15.475 billion. General Electric’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $28.473 billion. The EBITDA margin is 19.50 percent (the operating margin is 11.64 percent and the net profit margin 10.60 percent).
Financial Analysis: The total debt represents 58.36 percent of General Electric’s assets and the total debt in relation to the equity amounts to 293.37 percent. Due to the financial situation, a return on equity of 11.96 percent was realized by General Electric. Twelve trailing months earnings per share reached a value of $1.46. Last fiscal year, General Electric paid $0.76 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 17.80, the P/S ratio is 1.80 and the P/B ratio is finally 2.01. The dividend yield amounts to 3.37 percent and the beta ratio has a value of 1.46.
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| Long-Term Stock Price Chart Of General Electric (GE) |
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| Long-Term Dividend Payment History of General Electric (GE) |
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| Long-Term Dividend Yield History of General Electric (GE) |
General Mills (NYSE:GIS) has a market capitalization of $32.49 billion. The company employs 43,000 people, generates revenue of $17.909 billion and has a net income of $1.771 billion. General Mills earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $3.496 billion. The EBITDA margin is 19.52 percent (the operating margin is 16.51 percent and the net profit margin 9.89 percent).
Financial Analysis: The total debt represents 37.96 percent of General Mills assets and the total debt in relation to the equity amounts to 134.45 percent. Due to the financial situation, a return on equity of 27.63 percent was realized by General Mills. Twelve trailing months earnings per share reached a value of $2.82. Last fiscal year, General Mills paid $1.55 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 18.84, the P/S ratio is 1.81 and the P/B ratio is finally 4.99. The dividend yield amounts to 3.08 percent and the beta ratio has a value of 0.16.
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| Long-Term Stock Price Chart Of General Mills (GIS) |
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| Long-Term Dividend Payment History of General Mills (GIS) |
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| Long-Term Dividend Yield History of General Mills (GIS) |
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Kellogg (NYSE:K) has a market capitalization of $23.51 billion. The company employs 30,277 people, generates revenue of $14.792 billion and has a net income of $1.814 billion. Kellogg’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $3.675 billion. The EBITDA margin is 24.84 percent (the operating margin is 19.18 percent and the net profit margin 12.26 percent).
Financial Analysis: The total debt represents 47.55 percent of Kellogg’s assets and the total debt in relation to the equity amounts to 207.56 percent. Due to the financial situation, a return on equity of 60.75 percent was realized by Kellogg. Twelve trailing months earnings per share reached a value of $5.09. Last fiscal year, Kellogg paid $1.80 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 12.73, the P/S ratio is 1.59 and the P/B ratio is finally 6.68. The dividend yield amounts to 3.00 percent and the beta ratio has a value of 0.48.
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| Long-Term Stock Price Chart Of Kellogg (K) |
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| Long-Term Dividend Payment History of Kellogg (K) |
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| Long-Term Dividend Yield History of Kellogg (K) |
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| 25 Top Growth Picks (Click to enlarge) Source: Morningstar Screener |
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| 25 Top Growth Picks (Click to enlarge) Source: Morningstar Screener |
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*I am long GIS, GE, K. I receive
no compensation to write about these specific stocks, sector or theme. I don't
plan to increase or decrease positions or obligations within the next 72 hours.
For the other stocks: 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.