The price/earnings ratio of the Standard & Poor’s 500 right now is 24. According to multpl.com, the median p/e of the S&P for the many years of its existence is just 15.
So, the price investors are paying for the earnings of stocks is definitely higher than usual. Popular media favorites such as Google and Facebook have multiples of above 30.
Lesser known names with much lower p/e’s are available for those who might prefer cheap value when they can get it.
I’ve identified 4 in the consumer goods sector — apparel brands, to be specific — all of which have multiples of less than 15. All of these have earnings and pay dividends, always a nice combination if you can find it.
American Eagle Outfitters trades on the New York Stock Exchange with large volume: average daily shares traded is 4.44 million.
The company has a price/earnings ratio of 9 and pays a dividend of 3.89%. The earnings record is solidly in the green for this year and for the last 5-years. American Eagle has no long-term debt. Somebody doesn’t like the stock though: the short float is an unusually high 13.84%. If the shorts are ever forced to cover, it could be interesting.
Footlocker is NYSE-listed and trades with a price/earnings ratio of 8.49. Investors are being paid a 3.89% dividend.
Shareholder equity greatly exceeds any long-term debt and the current ratio is positive. Earnings are solidly green for the last 12 months and the 5-year track record is good as well. This is another one with disbelievers: the short float of 9.3% is higher than average and indicates a decent amount of skepticism. What kind of rally might ensue if they’re ever forced to cover?
Movado Group trades on the New York Stock Exchange with a p/e of 9 and at an 11% discount to its book value.
This is the company behind the well-known watch brands Hugo Boss and Tommy Hilfiger. Earnings this year are excellent and it’s in the green on the 5-year time frame. Movado pays a 3.98% dividend. Long-term debt is tiny and the current ratio is a green 3.5. This is another apparel stock unloved by short sellers: the short float sits at a very high 16.4%
Weyco Group is NASDAQ-traded and less well known than the 3 companies listed above. Average daily volume is just over 10,000 shares which typically makes it difficult for large institutions such as hedge funds to be involved.
The price/earnings ratio is 13. They’re paying a dividend of 4.01%. Weyco is trading at just above book value. The earnings record is positive for this year and the past 5 years. The short float comes to only 1.1%
I’ve written about finding value stocks using Benjamin Graham-derived techniques on this Forbes.com blog right here.
Stats courtesy of FinViz.com.
I do not hold positions in these investments. No recommendations are made one way or the other. If you’re an investor, you’d want to look much deeper into each of these situations. You can lose money trading or investing in stocks and other instruments. Always do your own independent research, due diligence and seek professional advice from a licensed investment advisor.