If you want to increase the likelihood of finding stocks that can beat the market over the next several years, you may want to screen for stocks with a favourable Shiller price-earnings ratio. The following stocks have a Shiller price-earnings ratio that is lower than the S&P 500 index's historical average of 16.72 (as of July 10).
Alexander's Inc
The first company that meets the above criteria is Alexander's Inc (ALX, Financial), a Paramus, New Jersey-based real estate investment trust company holding properties in New York City.
Alexander's Inc has a Shiller price-earnings ratio of 8.77 (versus the industry median of 14.18), which results from Friday’s share price of $239.33 and inflation adjusted earnings per share of $27.28 per year on average over the past 10 years.
The stock price has fallen 36.2% in the past year for a market cap of $1.22 billion and a 52-week range of $223.03 to $394.70.
GuruFocus has assigned a moderate rating of 4 out of 10 to the company’s financial strength and a very good rating of 7 out of 10 to its profitability.
The stock has a hold recommendation rating on Wall Street and an average target price of $280 per share.
Daqo New Energy Corp
The second company to consider is Daqo New Energy Corp (DQ, Financial), a Chinese manufacturer and seller of polysilicon to manufacturers of solar panels in the People's Republic of China.
Daqo New Energy Corp has a Shiller price-earnings ratio of 4.49 (versus the industry median of 29.48), which is the result of a share price of $89.62 as of July 10 and inflation adjusted earnings per share of $19.98 per year on average over the past 10 years.
The share price rose by almost 108% in the past year. The stock has a market cap of $1.25 billion and a 52-week range of $30.75 to $98.01.
GuruFocus has assigned a positive rating of 5 out of 10 to the company’s financial strength and a very good rating of 7 out of 10 to its profitability.
The stock has a buy recommendation rating on Wall Street and an average target price of $91.36 per share.
Keurig Dr Pepper Inc
The third company that qualifies is Keurig Dr Pepper Inc (KDP, Financial), a Burlington, Massachusetts-based global beverage company.
Keurig Dr Pepper Inc has a Shiller price-earnings ratio of 8.98 (versus the industry median of 20.88), which is the result of a share price of $29.20 as of July 10 and inflation adjusted earnings per share of $3.25 per year on average over the past 10 years.
The stock price has risen by almost 4% in the past year for a market cap of $4.84 billion and a 52-week range of $5.36 to $14.
GuruFocus has assigned a moderate rating of 4 out of 10 to the company’s financial strength and a positive rating of 6 out of 10 to its profitability.
The stock has an overweight recommendation rating on Wall Street and an average target price of $31.25 per share.
Disclosure: I have no positions in any securities mentioned in this article.
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