WSJ: Are There Any Cheap Stocks Left?
According to the article, One can use Societe Generale's screen that were heavily influenced by Benjamin Graham, the famous father of value investing, to identify stocks that are cheap. The screen look for shares where the earnings yield is at least twice that of top-rated corporate bonds, and where the dividend yield is at least two-thirds of the bond yield. Right now that means a historic price-to-earnings ratio of less than 9.4 or so, and a dividend yield of more than 3.55%, total debt less than two-thirds of tangible book value, and shares prices less than 16.5 times their so-called "cyclically adjusted" price-to-earnings ratio, also known as the Graham and Dodd PE. If you do the screen, only three US stocks in the MSCI World Index will show up, and they are: Oil major Chevron (NYSE:CVX), pharmaceuticals giant Merck (NYSE:MRK) , and contract oil and gas drilling company Patterson-UTI (NASDAQ:PTEN).
Read the complete article with wsj.com.