3 Low-Priced Stocks With P/E Ratios Below 10

This article was written by Jae Jun of Old School Value.

The S&P500 has returned 3.07 percent in 2015 and has shown signs of a sideways market. Tech companies like Google Inc GOOGL GOOG, Netflix, Inc. NFLX and Amazon.com, Inc. AMZN have outperformed the market at 25 percent, 152.1 percent and 68.8 percent respectively.

However there are big winners such as Weight Watchers International, Inc. WTW having jumped 40 percent to 50 percent from early July on improved guidance and earnings. Consider that at the end of June, Weight Watchers was down 80 percent, but the negative sentiment surrounding the stock has allowed it to rebound strongly on positive news.

Looking for stocks that the rest of the market is selling or avoiding can be classified as “catching a falling knife.”

Coupled with analysis, these types of stocks have proven to be an effective way for value investors such as Warren Buffett, Benjamin Graham, Bill Ackman and even Carl Icahn to compound their portfolios.

3 Stocks With A PE Below 10

1. Sanderson Farms, Inc. SAFM is in the business of distributing fresh and frozen chicken and operates a PE of 5.5. The stock is down 12.2 percent amidst fears of the avian flu that has plagued many poultry farms across the US. However, the company has stated that none of their farms or live stock have been affected by avian influenza. Since 2011, ROE performance has jumped from -25 percent to 31 percent in the last twelve months. A healthy balance sheet with a current ratio of 3.5 and negligible debt makes Sanderson Farms a very cheap stock.

2. Trinity Industries Inc TRN provides products and services to the energy, transportation, chemical and construction sector with a PE of 6.7. Trinity Industries has returned 1.2 percent in 2015, but has increased its ROE from 7.6 percent in 2011 to 20.6 percent in the trailing twelve months. The balance sheet also sports a current ratio of 2.7 signalling that paying off debt in the short term will not a problem.

3. Neustar Inc NSR provides real time information and analytics across various industries and has a PE of 9.4. Neustar has been outperforming the market by returning 10.9 percent to investors. The price to book value has reached the lowest point in over 10 years at 2.7 compared to 3.2 five years ago. Along with an ROE of 28 percent and 35 percent of cash making up its balance sheet, Neustar is a cheap stock to consider.