New Value Opportunities Selling below PE 12.5 May 19, 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|
|Noah Holdings Ltd||NOAH||-10.30%||12.15|
|Starwood Property Trust Inc||STWD||-6.72%||12.39|
|Taylor Morrison Home Corp||TMHC||-4.91%||12.01|
|Dime Community Bancshares Inc||DCOM||-4.87%||12.42|
|AECOM Technology Corp||ACM||-4.46%||12.46|
|Credit Acceptance Corp||CACC||-2.67%||12.49|
|Huntington Bancshares Inc||HBAN||-2.60%||12.50|
|City Holding Co||CHCO||-1.67%||12.47|
|Allstate Corp (The)||ALL||-0.67%||12.44|
|Dow Chemical Co (The)||DOW||-0.59%||12.43|
|Royal Bank of Canada||RY||-0.07%||12.49|
See any interesting value stocks 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.
Disclosure: I do not have any positions in the stocks listed in this article at the time this post was published.