I always scout for stocks with cheap price ratios. Benjamin Graham was a great teacher about identifying fundamentally cheap stocks and one of his most popular students were billionaire Warren Buffett (Trades, Portfolio) itself.
I love to buy stocks that are not far away from its fundamentally reasonable price. Three good indicators are Price-to-Book, Price-to-Sales and Price-to-Earnings.
Growth and a better-than-anticipated business environment are the main drivers for wealth that let the stock price skyrocket.
Integrate both in your trading strategy and you will get a better investment return.
Yesterday, I wrote about stocks that have tenfold their sales over the past decade. It is very impressive so see how strong companies can grow but if you look at Facebook, you pay a high price for that growth.
I'm not sure if your investment in Twitter (TWTR) and Facebook (FB) will pay off long term. You must carefully look at the P-Ratios.
I've created a small sheet of cheap dividend stocks with a dividend yield hitting the 2% yield mark. These are my criteria in detail:
- Dividend Yield over 2%
- P/B under 2
- P/S below 2
- Forward P/E under 15
- Market Cap over 2 billion
- Dividend Payout ratio under 60%
Eighteen stocks fulfilled my criteria of which one yields over five percent.
Below are my six favorites.
#1 Old Republic International (NYSE:ORI) has a market capitalization of $3.86 billion. The company employs 7,900 people, generates revenue of $5,442.70 million and has a net income of $447.90 million. Old Republic International's earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $718.30 million. The EBITDA margin is 13.20 percent (the operating margin is 12.76 percent and the net profit margin 8.23 percent).
Financial Analysis: The total debt represents 3.44 percent of Old Republic International's assets and the total debt in relation to the equity amounts to 15.08 percent. Due to the financial situation, a return on equity of 12.15 percent was realized by Old Republic. Twelve trailing months earnings per share reached a value of $1.60. Last fiscal year, Old Republic International paid $0.72 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 9.29, the P/S ratio is 0.71 and the P/B ratio is finally 1.02. The dividend yield amounts to 4.94 percent and the beta ratio has a value of 0.91. - See #2- #6 here: 6 Cheapest Stocks With Dividend Yields Over 2%...
