Many investors in the market consider themselves to be ‘value investors’…meaning they look for stocks whose earnings are strong relative to the price of the stock. These investors use a P/E ratio or multiple to compare values of stocks. In simple terms, the P/E ratio or multiple is simply the price of the stock divided by the company’s earnings per share. The higher the multiple the more overvalued the stock is said to be.
In this highly volatile, highly bearish market, I have been putting together several watchlists of stocks. One of my lists is below and it is based on stocks whose multiple is below 5. You will see the ticker and the P/E ratio. Many times, these companies are so low in price due to forced selling or margin calls. When the forced selling subsides, large gains can be found in these stocks.
AKS @ 3.45
ATI @ 4.29
EXM @ 1.92
KWK @ 3.55
CPN @ 1.43
VLO @ 4.93
GNK @ 2.69
Happy Trades,
Jeff
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