24 Low P/E Ratio Stocks and ADRs for February 2016

At this time in the market there is no shortage of stocks selling at low multiples of their fundamentals. There is blood in the streets, specially among the small and mid caps, and of course the value assets have suffered in the last couple of years. This makes low P/E stocks even more enticing from valuation perspective. Investors who scare easily have had many months to make their exits and no one wants to take risks anymore – perfect time for value investors to start buying the right stocks.

The following screen is quite simple. I have searched for stocks that not only have a low P/E ratio, but they also have high expected earnings growth in the next 3-5 years. Earnings estimates are normally not worth paying attention to, except as an indication from the management about the direction of the growth (most analysts take management guidance as their basis for future projections).

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Industry: Airlines

Airlines are a very commodity business with cut throat competition. Current low oil prices have helped airlines on the cost side of the ledger, and as a result many of these stocks now show improved earnings. However, investors are not willing to pay up for these improved earnings as they are not result of any fundamental change in the business model, just a temporary boost that will go away when the oil prices return to higher levels. Virgin America, in the list below, is also particularly cash rich.

Symbol Company Name Industry Price Market Cap P/E (TTM) Forward EPS Growth (3-5 Yrs)
DAL Delta Air Lines Inc. Airlines $44.58 $33.5B 7.9 23.15%
VA Virgin America Inc Regional Airlines $29.29 $1.2B 8.5 33.13%

Industry: Construction and Building Materials

Most construction companies can be purchased today at prices below the book value per share of the company. The following companies also trade at low p/e and this makes them potentially very attractive investments. USG stock has been a perennial Warren Buffett favorite.

Symbol Company Name Industry Price Market Cap P/E (TTM) Forward EPS Growth (3-5 Yrs)
CCS Century Communities Inc Residential Construction $14.76 $307.2M 9.2 38.50%
ESNT Essent Group Ltd Mortgage Investment $17.15 $1.6B 10 35.37%
NWHM New Home Company Inc (The) Residential Construction $ 8.09 $159.8M 9.1 25%
TPH TRI Pointe Group Inc Residential Construction $ 9.67 $1.5B 9.7 34.39%
USG USG Corp General Building Materials $20.61 $2.9B 3.1 25.20%


Industry: Oil & Gas

Oil markets have taken a beating in the last year and consequently most oil and oil related services stocks are treading close to their 52 week lows. In case of ALJ, this is a little unfortunate as the company has been able to protect its refining margins and grow its EPS (even as the revenues has declined due to low market prices. I would expect the Forward EPS Growth expectations quite in accurate in this case given that the market is not rational today. When the oil prices rise, these stocks should do really well.

Symbol Company Name Industry Price Market Cap P/E (TTM) Forward EPS Growth (3-5 Yrs)
ALJ Alon USA Energy Inc Oil & Gas Refining & Marketing $10.64 $750.8M 6.8 29.90%
MRD Memorial Resource Development Corp Oil & Gas Drilling & Exploration $10.90 $2.3B 8.5 50%
SM SM Energy Co Independent Oil & Gas $ 9.31 $679.1M 2.8 24%
YPF Ypf Sociedad Anonima Yacimientos Petroliferos Fisc Major Integrated Oil & Gas $16.54 $6.4B 7.9 22.50%

Industry: Banking & Insurance

Most banks and financial stocks have suffered recently. European banks in particular. The level of the sell off in these names has been extraordinary and does not bear much likeness to the value contained in these shares.

Symbol Company Name Industry Price Market Cap P/E (TTM) Forward EPS Growth (3-5 Yrs)
BNPQY BNP Paribas Money Center Banks $22.68 $55.4B 6.8 329.10%
C Citigroup Inc Money Center Banks $38.89 $111.8B 7.2 33.48%
HCI HCI Group Inc Property & Casualty Insurance $34.27 $365.3M 5.6 25%
IBN Icici Bank Ltd Money Center Banks $ 5.60 $15.9B 8 22%

Industry: Shipping

Tankers still do great business though containerships and dry bulkers have been idling for some time as the supply of ships continues to grow and the demand has fallen.

Symbol Company Name Industry Price Market Cap P/E (TTM) Forward EPS Growth (3-5 Yrs)
DAC Danaos Corp Shipping $ 4.71 $511.6M 8.7 45.33%
TNK Teekay Tankers Ltd Shipping $ 4.36 $620.6M 3.5 24.70%
TNP Tsakos Energy Navigation Ltd Shipping $ 5.28 $425.3M 3.7 38.53%

Industry: Other

Finally, let’s consider these one off ideas from many different industries. I like finding these ideas as they help diversify the portfolio and may also help in asset allocation.

Symbol Company Name Industry Price Market Cap P/E (TTM) Forward EPS Growth (3-5 Yrs)
GTLS Chart Industries Inc Metal Fabrication $16.93 $501.2M 9.6 22.50%
CHMT Chemtura Corp Specialty Chemicals $26.48 $1.7B 2.8 38.10%
INWK InnerWorkings Inc Business Services $ 6.59 $348.8M 7.9 22.33%
LVLT Level 3 Communications Inc Diversified Communication Services $47.98 $16.6B 5 48%
LGND Ligand Pharmaceuticals Inc Biotechnology $89.03 $1.7B 7.3 46.97%
LDL Lydall Inc. Auto parts $26.82 $456M 9.8 22.50%

It should be noted that the list this time is actually much more diverse than we have found in the last 2 years. Perhaps this is a sign that some of the froth in the market is coming off slowly. It is worthwhile to spend some time reviewing the entire list and find your next big idea.

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