Despite the highest stock market prices in history and Presidential tweets proclaiming the wonder of the economy, it’s still possible to identify equities coming in at under book value and with price/earnings ratios actually somewhat close to earth.
What if — under these conditions of over valuation — you could find stocks trading with price/earnings ratios of below 15 and at less than their book value? You know, like Warren Buffett used to do it.
Instead of falling in love with Tesla, now trading with a forward p/e of 75, at 12 times book and with more debt then equity, what if you could consider old-school valuation techniques and identify what they used to call “cheap.”
Are there still such things as actual value stocks?
Here are 4 possible candidates:
WestRock is a New York Stock Exchange-listed stock in the “packaging solutions” business with headquarters in Atlanta.
The stock trades with a price/earnings ratio of 12.65 and at a 7% discount to its book value. The record of earnings is quite good for this year and looks in the green over the past 5 years. Investors receive a fat 4.68% dividend. That long-term debt exceeds shareholder equity is a concern — however, the current ratio is positive.
Metlife is the brand name life insurance firm that’s been around for 145 years. Based in New York, the stock trades on the NYSE.
The price/earnings ratio of Metlife is an amazingly low 6.85. You can buy shares at the current price for 70% of the company’s book value. Shareholder equity is greater than long-term debt. The dividend payment comes to 3.43%. With an average daily volume of 5.3 million shares, no need to worry much about liquidity.
AXA Equitable Holdings is an NYSE-listed insurance brokerage founded in 1859 and headquartered in New York.
The p/e is 14.73 and it trades at an 18% discount to its book value. Long-term debt is less than total shareholder equity. Investors receive a dividend of 2.41%. Earnings this year are excellent and the 5-year track record of earnings is very good.
Amplify Energy is an independent oil and gas company that trades on the New York Stock Exchange.
This one requires closer inspection than those listed above. With a price/earnings ratio of 6.46 and trading at just half its book value, the stock is definitely “cheap.” One concern is that long-term debt exceeds shareholder equity. Also, it’s odd that the dividend yield is 11% — how likely can that high of a payout be sustained? Meantime, Amplify’s earnings this year are excellent and the 5-year record is good. Average daily volume is relatively low at just 248,000 shares.
Stats courtesy of FinViz.com.
I do not hold positions in these investments. No recommendations are made one way or the other. If you’re an investor, you’d want to look much deeper into each of these situations. You can lose money trading or investing in stocks and other instruments. Always do your own independent research, due diligence and seek professional advice from a licensed investment advisor.
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