To enhance the likelihood to unearth value opportunities, investors may find it helpful to screen the market for stocks with a compelling forward price-earnings ratio.
According to Morningstar analyst estimates, the following three stocks have a forward price-earnings ratio that stands below the S&P 500 index's historical average of 15.
AllianceBernstein Holding LP
The first company to consider is AllianceBernstein Holding LP (AB, Financial), a New York-based asset management company.
AllianceBernstein has a forward price-earnings ratio of 11.53 (versus the industry median of 12.77), which results from Friday’s share price of $26.30 and analyst expectations for EPS of about $2.28 for the next full fiscal year.
The stock price has decreased 6.1% in the past year for a market cap of $2.57 billion and a 52-week range of $13.24 to $36.06.
GuruFocus has assigned a good rating of 7 out of 10 to the company’s financial strength and a moderate rating of 4 out of 10 to its profitability.
The stock has an overweight recommendation rating on Wall Street.
Knoll Inc
The second company to consider is Knoll Inc (KNL, Financial), an East Greenville, Pennsylvania-based manufacturer and seller of equipment and supplies for the workplace and residential markets in North America and internationally.
Knoll Inc has a forward price-earnings ratio of 12.66 (versus the industry median of 20.81), which is the result of a Friday’s closing share price of $13.79 and analyst expectations for EPS of about $1.09 for the next full fiscal year.
The stock price has declined by 35% in the past year for a market capitalization of $698.43 million and a 52-week range of $7.74 to $28.30.
GuruFocus has assigned a rating of 4 out of 10 to the company’s financial strength and a good rating of 7 out of 10 to its profitability.
As of June, two Wall Street sell-side analysts recommended a strong buy rating for the stock and another two recommended a buy rating.
TC Pipelines LP
The third company to consider is TC Pipelines LP (TCP, Financial), a Houston, Texas-based oil and gas midstream operator in North America.
TC Pipelines has a forward price-earnings ratio of 9.73 (versus the industry median of 13.14), which is the result of Friday’s closing share price of $35.09 and analyst expectations of EPS of about $3.61 for the next full fiscal year.
The stock price has declined by 6% in the past year for a market cap of $2.57 billion and a 52-week range of $18 to $44.65.
GuruFocus has assigned a low rating of 3 out of 10 to the company’s financial strength but a very good rating of 7 out of 10 to its profitability.
The stock has a buy recommendation rating on Wall Street.
Disclosure: I have no positions in any securities mentioned in this article.
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