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.
I 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.