Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Random low P/E stocks.
Old 03-12-2007, 02:28 PM   #1
Full time employment: Posting here.
CCdaCE's Avatar
 
Join Date: Apr 2006
Posts: 887
Random low P/E stocks.

What's going on here?

Am I becoming better at stumbling on to "good stocks" or is something going on with earnings -- still claiming high earnings after the housing "boom"?

Seems like the last few stocks I'd think about buying have rediculously low Price/Earnings multiples.

Obviously, I don't have a clue about what I'm doing, and there are more measures to look at beside P/E, etc. Mostly, all of this is just entertainment.

NUE - Nucor Corp.

WOR - Worthington Industries, Inc.

... both steel related.

USG - USG Corporation

... gypsum

CAT - Caterpillar Corp

URI - United Rentals, Inc.

IR - Ingersoll-Rand Company Limited

.. equipt./machinery

Etc.

Mostly all similar P/E (no raging deals) compared to their sector. Just all seem to have low P/E's.

In addition, forward P/E is generally lower (tendency to over-estimate earnings?).

Any comments?

-CC


__________________

__________________
"There's those thinkin' more or less, less is more, but if less is more, how you keepin' score?
It means for every point you make, your level drops. Kinda like you're startin' from the top..." "Society" - Eddie Vedder
CCdaCE is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Random low P/E stocks.
Old 03-12-2007, 02:46 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: Random low P/E stocks.

These are cyclicals, so earnings will be pretty volatile through the economic /industry cycle. There are two ways to make money with these kinds of stocks:

1) make a correct call on where we are in teh cycle

2) Buy when the market has bashed the stocks down far enough that they are cheap even if the cycle slides somewhat.
__________________

__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: Random low P/E stocks.
Old 03-12-2007, 02:56 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,450
Re: Random low P/E stocks.

Personally, I think P/E need to be in the 7 or 8 range to be considered ridiculously low. That said most of the companies do have relatively low P/E primarily because they are cyclical stocks and the conventional wisdom is we are near the top of the business cycle. For example in the old days when GM and Ford were actually making money they would have a P/E near 5 or 6 at the end of economic expansion.

FWIW, it is worth Warren Buffet has been acquiring shares of USG for sometime; now following Buffett isn't a sure-fire path to riches, but it is comforting to know that your aren't being stupid.

I've owned CAT for 8 years, and it has almost tripled in value plus a respectable dividend. The company does seem to have its act together as far putting out a quality product, and delivering reasonably dependable earnings, but a worldwide economic recession will hurt it badly as construction projects get canceled.
__________________
clifp is offline   Reply With Quote
Re: Random low P/E stocks.
Old 03-12-2007, 03:05 PM   #4
Full time employment: Posting here.
CCdaCE's Avatar
 
Join Date: Apr 2006
Posts: 887
Re: Random low P/E stocks.

Quote:
Originally Posted by clifp
<snip>

FWIW, it is worth Warren Buffet has been acquiring shares of USG for sometime; now following Buffett isn't a sure-fire path to riches, but it is comforting to know that your aren't being stupid.

I've owned CAT for 8 years, and it has almost tripled in value plus a respectable dividend. The company does seem to have its act together as far putting out a quality product, and delivering reasonably dependable earnings, but a worldwide economic recession will hurt it badly as construction projects get canceled.
Well, maybe Warren is playing both sides since USG got smacked with asbestos suits and Warren had a part in bailing them out, insurance-wise. Once he/they got a handle on how much this would cost 'em... and once that is over, he'll profit handsomely.


Seems like CAT got smacked when raw materials prices went up, too. Ahh, risk.

-CC
__________________
"There's those thinkin' more or less, less is more, but if less is more, how you keepin' score?
It means for every point you make, your level drops. Kinda like you're startin' from the top..." "Society" - Eddie Vedder
CCdaCE is offline   Reply With Quote
Re: Random low P/E stocks.
Old 03-12-2007, 03:18 PM   #5
Recycles dryer sheets
 
Join Date: May 2006
Posts: 230
Re: Random low P/E stocks.

I've looked at four of the ones you mentioned (USG, IR, CAT & NUE). They look okay, but to me they don't look bargain cheap either. Be sure to look at their debt since that will be important when their cyclical earnings decline. I think I remember USG having a lot of debt.

Others I've looked at as being "PE cheap" candidates but which I have not bought are Illinois Tool Works (ITW), Graco (GGG), Dover (DOV), Eaton (ETN), Lincoln Electric (LECO). I like ITW and GGG best as historically they seem less cyclical than the others. But I didn't like either enough to buy them. Just one more opinion . . .
__________________
terminator is offline   Reply With Quote
Re: Random low P/E stocks.
Old 03-12-2007, 04:05 PM   #6
Thinks s/he gets paid by the post
wildcat's Avatar
 
Join Date: Feb 2005
Location: Lou-evil
Posts: 2,025
Re: Random low P/E stocks.

Better to use normalized earnings for the cyclicals - somewhat close to an avg between the boom/bust cycle.

USG may be aquired by Buffet at some point. One of my greatest follies thus far was selling a lot USG shares early - around $8 - at a cost of $4 during bankruptcy. I was worried my equity was going to be worth squat.

I'd take a pass on the others.
__________________
"These walls are kind of funny. First you hate 'em, then you get used to 'em. Enough time passes, gets so you depend on them"
wildcat is offline   Reply With Quote
Re: Random low P/E stocks.
Old 03-12-2007, 05:33 PM   #7
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 3,862
Re: Random low P/E stocks.

If everyone wanted them, they wouldn't have low P/E's.

Also look at the historical industry P/E's. Some just run low all the time.

You checked the forward P/E, but that's still a guess. It could be a case of great past 12 months and lousy investor expectations for the coming 12 months.

Dan
__________________
Animorph is offline   Reply With Quote
Re: Random low P/E stocks.
Old 03-13-2007, 08:45 AM   #8
Dryer sheet aficionado
 
Join Date: Oct 2006
Posts: 39
Re: Random low P/E stocks.

Some more ideas for you (all P/E's trailing):

Aspen Insurance (AHL): P/C insurance and reinsurance with heavy marine exposure. 6.8X P/E, 1.15X P/B.

Devon (DVN): Large independent oil/gas producer. 9.5X P/E, 1.64X P/B and management guidance is a doubling of book value from 2006-2009! Acquisition candidate. Crude seems to have bottomed.

Telekom Indonesia ADR (TLK): 10.9X earnings and growing at 20% per year. Cheap emergng market mobile play.

- M
__________________
milmoose is offline   Reply With Quote
Re: Random low P/E stocks.
Old 03-13-2007, 09:36 AM   #9
Full time employment: Posting here.
CCdaCE's Avatar
 
Join Date: Apr 2006
Posts: 887
Re: Random low P/E stocks.

Thanks everyone for your insight and comments... I still have to max. out the wife's Roth, before I let the trading hormones run wild.

-CC
__________________
"There's those thinkin' more or less, less is more, but if less is more, how you keepin' score?
It means for every point you make, your level drops. Kinda like you're startin' from the top..." "Society" - Eddie Vedder
CCdaCE is offline   Reply With Quote
Re: Random low P/E stocks.
Old 03-13-2007, 09:41 AM   #10
Thinks s/he gets paid by the post
maddythebeagle's Avatar
 
Join Date: Jun 2005
Posts: 2,450
Re: Random low P/E stocks.

Quote:
Originally Posted by terminator
I've looked at four of the ones you mentioned (USG, IR, CAT & NUE). They look okay, but to me they don't look bargain cheap either. Be sure to look at their debt since that will be important when their cyclical earnings decline. I think I remember USG having a lot of debt.

Others I've looked at as being "PE cheap" candidates but which I have not bought are Illinois Tool Works (ITW), Graco (GGG), Dover (DOV), Eaton (ETN), Lincoln Electric (LECO). I like ITW and GGG best as historically they seem less cyclical than the others. But I didn't like either enough to buy them. Just one more opinion . . .
I have a drip with Graco and have been adding...I have thought about adding ITW, Dover, or CAT...
__________________

__________________
- Hurry! to the cliffs of insanity!
maddythebeagle is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Why Do Stocks Go Up? wabmester FIRE and Money 75 08-14-2006 12:17 PM
Swedroe comments on buying individual stocks. Nords FIRE and Money 27 10-12-2005 10:20 PM
Question on Dividend Stocks or Funds modhatter FIRE and Money 43 10-03-2005 10:11 AM
Low Interest Rates Here To Stay? Donner FIRE and Money 23 02-13-2005 03:02 PM
Interesting study on P/E ratios & expected returns Cb Other topics 2 06-30-2002 10:48 PM

 

 
All times are GMT -6. The time now is 06:31 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.