These are tough times for investors who look for cheap companies. The Dow and S&P 500 jump from high to high, but this boom is credit-driven; it's the result of the monetary easing policy of the world's major government banks.
The good thing is that we can buy stocks in every market situation, whether the market has a P/E level of 30 or 10. What we need to is to look at solid growth for the single stock and not overpay for the future prospects of an asset.
When I look at the market today, I see that the financial sector, conglomerates and basic material stocks are the cheapest valued ones in terms of forward P/E, but the highest growth is predicted for the Services and Technology sector, both of which have the highest P/E ratios.
Tech stocks have made many people rich, but if you recall the dot.com bubble in 2000, many investors and private dealers lost their money because they believed that their super high-flying stock could change the world.
Facebook, Twitter and Google dominate our world today, but will they do it in 10 or 20 years too? For sure, Microsoft has survived over 40 years. Oracle, IBM and even Apple also developed into dominant players and created a long track record, but technology is a fast changing business. You can make billions in a year, but also lose all your money in the next half-decade.
I own some of the old-school technology stocks too, but I don't like to pay for the uncertain future of a company more than it makes sense in an economic view. I will not pay 500 times sales today because of the company's next revolutionary product if I don’t understand how it works.
I want dividends and a fair chance to make an 8 percent or more return, nothing else. The market has enough opportunities to realize this goal, and it is easy to succeed.
I've found a new screener on Morningstar, but it seems only to work with Canadian and US stocks. Morningstar has a great classification of companies, from financially healthy to growth, so I tested it.
Today, I was looking for fairly valuated growth stocks with a good dividend yield. In addition, 5-year expected earnings growth had to be over 8 percent. The screen delivered 25 results, and my focus is still on consumer stocks, as well as non-cyclical dividend payers.
Below are 5 of my favorite picks. Do you like some of them? Please let me know what you think from the screen.
#1 Verizon (NYSE:VZ) has a market capitalization of $204.90 billion. The company employs 176,800 people, generates revenue of $120.550 billion and has a net income of $23.547 billion. Verizon’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $42.064 billion. The EBITDA margin is 34.89 percent (the operating margin is 26.52 percent and the net profit margin 19.53 percent).
Financials: The total debt represents 34.15 percent of Verizon’s assets and the total debt in relation to the equity amounts to 240.99 percent. Due to the financial situation, a return on equity of 31.94 percent was realized by Verizon. Twelve trailing months earnings per share reached a value of $4.71. Last fiscal year, Verizon paid $2.08 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 10.50, the P/S ratio is 1.70 and the P/B ratio is finally 3.64. The dividend yield amounts to 4.29 percent and the beta ratio has a value of 0.41. Read more from #2-#5 and discover 20 more stocks here...25 Of The Most Attractive Dividend Stocks
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