IB Net Payout Yields Model

4 Stocks Trading With PE Ratios of 5

It is amazing to be able to write an article about stocks trading around a forward Price-Earnings ratio of 5. Honestly, why would investors be willing to part with a company earning enough money to pay investors back in 5 years? Bonds and Treasuries can't come close to matching that, especially with interest rates at historical lows. These corporate earnings should be ever more valuable.

What is ultimately amazing is that these stocks aren't comeback stories or rebound stocks. These companies aren't forecasting massive growth that might not be achievable in 2012. For the most part, earnings have been stable and predictable for the last few quarters if not the last couple of years.

Why then is the market ignoring the earnings bounty provided by these stocks at current prices? Honestly, that question is perplexing. All four stocks had strong earnings in Q3 (outside a catastrophe loss at one firm) when markets faced huge financial turmoil. If earnings held up then, why would one consider future earnings at risk?

Read the full article at Seeking Alpha.

Disclosure: Long AER, CJES, HIG, and LNC. Please review the disclaimer page for more details.


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