For deep value investors, the U.S. stock market offers slim pickings. A quick glance at the Russell 1000 Value Index will tell you that large capitalization, U.S., companies are not cheap at a price-to-earnings ratio of 19 times.
The S&P 500 is up almost 2.8% since the beginning of February and up over 8% since Donald Trump was elected President. Consequently, it is important to focus on stocks with two characteristics: an attractive relative valuation and sensitivity to policy changes.
The Trump administration has promised to cut corporate regulations and tax rates, and engage in massive fiscal stimulus. Assuming those policy changes can be implemented they are naturally bullish for the stock market. The key is to find companies that are likely to be benefit asymmetrically for those policy changes and which do not already carry unreasonable valuations.
Attached you will find a couple of stocks that might be interesting in this enviroment. I run a screen with a main focus on valuation and growth.
These were my results...maybe you agree. There are some names on the list that are not popular but might be interesting in terms of free cash flow.
Here are the results...
Dividend Income orientated Blog. Ideas and Thoughts about Stocks, Dividends and Growth Opportunities.
Showing posts with label HA. Show all posts
Showing posts with label HA. Show all posts
14 Dividend Paying Stocks With Low P/E's And High Returns On Invested Capital
I built a screen that I would like to share that acts as a starting point in identifying quality stocks that have great historical returns on invested capital and relatively low current valuations.
Only companies that had a market cap over $1 billion and headquarters located in the U.S. were included.
I used EBIT as the earnings metric, so it is not a perfect after-tax return on invested capital. I calculated invested capital two ways, one with goodwill, and one without goodwill.
In addition, each of stocks has a low forwad P/E, a positive dividend yield and payout ratios below 52 percent. The return on assets is between 7.50% and 32.70%.
14 stocks fulfilled my critera.
These are the results...
Only companies that had a market cap over $1 billion and headquarters located in the U.S. were included.
I used EBIT as the earnings metric, so it is not a perfect after-tax return on invested capital. I calculated invested capital two ways, one with goodwill, and one without goodwill.
In addition, each of stocks has a low forwad P/E, a positive dividend yield and payout ratios below 52 percent. The return on assets is between 7.50% and 32.70%.
14 stocks fulfilled my critera.
These are the results...
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| 14 Dividend Paying Stocks With Low P/E's And High Returns On Invested Capital (click to enlarge) |
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