While I made my daily research on
several stock market screeners, one question came deeply into my mind. When the
markets are so expensive, who are the cheapest stocks, not by P/E but in terms
of cash flow or Ebitda. I also included the Cash and debt of the company.
So, the good thing
is that you can buy stocks in every market cycle but you must be careful with
your investment spending.
Your final return depends in the end on your inital investment cost and if you buy at a high price, your return will fall into a low or negative area.
Good to know that dividends can upper your yield but my experience is that it could be very painful for an investor to look at a suffering return over years.
Your final return depends in the end on your inital investment cost and if you buy at a high price, your return will fall into a low or negative area.
Good to know that dividends can upper your yield but my experience is that it could be very painful for an investor to look at a suffering return over years.
These are my
criteria:
- Market Cap over
15 Billion
- Dividend Yield
in the higher yield space over 3 percent
- Cheapest
Enterprise-To-Ebitda Ratio on the market
My screen
delivered some interesting results in the large cap area: Oil companies are
top.
COP, CVX are the
best results in terms of EV/EBITDA. Both have a ratio of around 5 which is very
comfortable in the current situation but what about Russia and the Middle East
crises?
My second best
results came from the technology space: Intel and Verizon. Warren Buffett added
his VZ stake by one third on the past quarter and he might be right because VZ
is much cheaper than rival AT&T. The EV/EBITDA ratio is only at 6.35 while
T has a ratio of 9.66.
Healthcare is also good positioned
with Merck, Pfizer and Eli Lilly but those are suffering on the patent cliff.
I believe that it
does not make sense to look at stocks with a higher ratio. For sure cash flows
can come down and the full sheet becomes trash but most of the companies serve
values. What are your thoughts about my current screen? How are you invested?
These are the best results in terms of lowest debt-to-equity ratio: