New Value Opportunities Selling below PE 12.5 May 5, 2014

What stocks are on sale this week? One method to try to answer this question is to look for stocks that recently started trading below a Price to Earnings (PE) ratio of 12.5.  Why 12.5?  A PE of 12.5 is the same as an earnings yield of 8%, which provides a decent return given an approximately 3% nominal return on a 5% equity risk premium. That still rather arbitrary, but it is still helpful to draw a line in the sand.

Sale tagI screen the list of U.S. stocks with a market capitalization of at least $500 million. I then looked for stocks currently trading with a PE below 12.5, but in the previous week had a PE above 12.5 using the Portfolio123 stock screener.

Here’s this week’s list:

Company Ticker PE % change Current PE including extraordinary items
 Newfield Exploration Co  NFX  -58.97%  10.99
 SPX Corp  SPW  -58.97%  8.81
 MoneyGram International Inc  MGI  -50.33%  9.19
 Associated Estates Realty Corp  AEC  -29.39%  10.46
 Statoil ASA  STO  -25.41%  10.32
 Trinity Industries Inc.  TRN  -25.02%  11.54
 Cigna Corp  CI  -21.32%  11.95
 American Axle & Manufacturing Holdings Inc  AXL -16.68%  11.89
 Apollo Commercial Real Estate Finance Inc  ARI  -10.55%  12.10
 City Holding Co  CHCO  -9.90%  12.47
 Hornbeck Offshore Services Inc.  HOS  -8.68%  12.24
 NCR Corp  NCR -8.62%  11.82
 Ternium SA  TX -4.29%  12.40
 Kraft Foods Group Inc  KRFT -2.75%  12.22
 Exelis Inc  XLS -2.54%  12.42
 Golub Capital BDC Inc  GBDC -2.28%  12.22
 Netease Inc  NTES -1.79%  12.41

See any interesting opportunities in this list? Share your thoughts in the comments section below. Also, please let me know if you would like to see this list weekly in the future.

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