The questions “does it have a low price-earnings ratio” and “is it paying a dividend” are the beginnings of identifying value stocks per Benjamin Graham. In his classic works, "Security Analysis" and "The Intelligent Investor," the Columbia University business professor who taught Warren Buffett (Trades, Portfolio) long ago, insisted on a number of factors to find value.
There’s a lot more to it, of course, but starting off with the answers to these two questions helps to get investors on the right foot.
With that in mind, here are four stocks that a value-oriented investor might investigate.
AngloGold Ashanti Ltd. (AU, Financial) is a New York Stock Exchange-traded precious metals company with operations mainly in South Africa. The price-earnings ratio is 7.34 at a time when the Shiller price-earnings ratio for the S&P 500 sits at 38.50. The company is paying a dividend that yields 3.46%.
Earnings per share grew this year at 159%. The five-year earnings per share growth rate is 97.2%. Shareholder equity exceeds long-term debt. GuruFocus data shows AngloGold with “6 good signs and 2 medium warning signs.” The stock is volatile this year: after peaking in May at $26.5 per share, it currently trades for $15.19.
Gold Fields Ltd. (GFI, Financial) is also a NYSE-traded precious metals outfit that is also based in South Africa. Similar to AngloGold, the price-earnings ratio is a mere 7.94. It pays a 4.42% dividend yield. The growth this year in earnings per share is 316%.
The earnings per share growth for the past five years is 35.7%. GuruFocus gives Gold Fields “7 good signs and 1 medium warning sign.” Shareholder equity exceeds long-term debt. The stock reached a high of $12.50 per share in May and has since declined to $8.14.
Manulife Financial Corp. (MFC, Financial) is an NYSE-listed Canadian insurance company with headquarters in Toronto, Ontario. It’s trading right now with a price-earnings ratio of 6.78. Investors receive a dividend with a 4.58% yield. The company had 6% earnings per share growth this year and a 22.80% growth rate when viewed on a five-year timeframe.
The GuruFocus summary of financials has Manulife with “2 good signs and 3 medium warning signs.” The stock peaked at $22 per share in May and now trades for $19.33.
Star Bulk Carriers
Star Bulk Carriers Corp. (SBLK, Financial) is a marine shipping company based in Greece. The Nasdaq-traded stock has a price-earnings ratio of 10.18. It is paying a dividend yield of 4.63%. Earnings per share growth this year come in at 158%. The five-year rate of earnings per share growth is 15%.
Star Bulk Carriers peaked at $26 per share earlier this month and now goes for $20.74. GuruFocus' summary of the financials shows “2 good signs, 1 medium warning sign and 4 severe warning signs.” The company has more long-term debt than equity.
Whether these are buys or not would require more extensive analysis. The fact that all of them are trading with lower-than-market price-earnings ratios -- and that they’re all paying a dividend -- makes them stand out. It’s likely that they’re showing up on the screens of big-money value investors looking for potential candidates.
Become a Premium Member to See This: (Free Trial):
- List of 52-Week Lows, 52-Week Highs
- List of 3-Year Lows, 3-Year Highs
- List of 5-Year Lows, 5-Year Highs