(This article appeared first on The Stock Market Blueprint Blog.)
Here's a breakdown of the five best contrarian stocks as displayed on the Contrarian Approach stock screen.
This screen is influenced by the strategies discussed by David Dreman (Trades, Portfolio) in the book "Contrarian Investment Strategies."
Contrarian Approach description
Contrarian Approach is a simple screen that finds solid companies trading at low price ratios.
The screen is inspired by Dreman’s contrarian investment philosophy. Dreman believes strongly in market overreactions and the principle of mean reversion.
His research and professional experience shows that a diversified list of financially strong, adequately sized companies, currently out-of-favor with the market, “provide superior returns over time.”
Click here to learn more about the Contrarian Approach stock screen.
Five best contrarian stocks
Here’s a breakdown of the five best contrarian stocks. These stocks have the lowest price ratios after meeting the following criteria:
- Market capitalization > $1 billion.
- Current ratio > 2.
- Debt/equity < 50%.
Universal Corp. (UVV, Financial): Involved in procuring, financing, processing, packing, storing and shipping leaf tobacco to manufacturers of consumer tobacco products.
- Market capitalization: $1.80 billion.
- Price to earnings: 15.86.
- Price to book: 1.28.
- Price to free cash flow: 5.50.
- Current ratio: 6.27.
- Debt/equity: 0.31.
- Closing price on Jan. 5: $63.85.
Genesco Inc. (GCO, Financial): Engages in the design, sourcing, marketing and distribution of footwear, apparel and accessories through retail stores.
- Market capitalization: $1.26 billion.
- Price to earnings: 14.18.
- Price to book: 1.46.
- Price to free cash flow: 8.93.
- Current ratio: 2.40.
- Debt/equity: 0.14.
- Closing price on Jan. 5: $60.20.
Benchmark Electronics Inc. (BHE, Financial): Provides integrated electronic manufacturing services in the Americas, Asia and Europe.
- Market capitalization: $1.53 billion.
- Price to earnings: 18.56.
- Price to book: 1.15.
- Price to free cash flow: 5.49.
- Current ratio: 3.69.
- Debt/equity: 0.17.
- Closing price on Jan. 5: $30.60.
Valero Energy Corp. (VLO, Financial): Refines and markets petroleum such as gasoline, jet fuel, asphalt, petrochemicals and more.
- Market capitalization: $31.23 billion.
- Price to earnings: 14.11.
- Price to book: 1.54.
- Price to free cash flow: 13.56.
- Current ratio: 2.05.
- Debt/equity: 0.44.
- Closing price on Jan. 5: $67.68.
Dril-Quip Inc. (DRQ, Financial): Designs, manufactures, sells and services offshore drilling and production equipment for use in deepwater, harsh environment and severe service applications worldwide.
- Market capitalization: $2.36 billion.
- Price to earnings: 16.87.
- Price to book: 1.72.
- Price to free cash flow: 9.45.
- Current ratio: 13.34.
- Debt/equity: 0.00.
- Closing price on Jan. 5: $62.80.
Mitchell Mauer is the founder of TheStockMarketBlueprint.com. The Stock Market Blueprint is a site that finds value stocks for investors building long-term wealth. The site’s investment philosophy is anchored in principles established by Benjamin Graham and his most reputable followers over the last 100 years.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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