Black Friday is right around the corner, and as retailers are poised to roll out doorbusters and discounts deeper than any we’ve seen in years, the stock market is literally having the sale of the century. Energy companies and industrial companies are selling for some of the cheapest multiples seen in decades, as many fundamentally sound companies have been unfairly pummeled.
With so many quality names on sale, what will you buy? To jump-start your search, put the Motley Fool’s CAPS stock screener to work to find superstars like Transocean (NYSE: RIG) or Corning (NYSE: GLW) that have been unfairly sold off. Transocean, an offshore contract driller for oil and gas wells, is selling for a price-to-earnings multiple of 3.9. That’s down from 11.1 when the stock was selling for $161 per share in late May. Corning currently sells for a price-to-earnings ratio of 3, compared with 16.8 at the height of its price performance this year in May.
To find great values, I focused my screen on several metrics:
- Price-to-earnings of 15 or less.
- Price-to-sales multiples of 5 or less.
- Price-to-book multiples of 2 or less.
Aside from just finding companies that are downright cheap, I also wanted to ensure that my screen returned quality stocks. Right now, the good, the bad, and the ugly are all trading at inexpensive prices. The rotten companies are cheap because they operate bad businesses, whereas the good companies have merely been unfairly sold off. Therefore, I also limited my search to companies with:
- Five-star ratings, the highest possible, from our CAPS community.
- A current ratio of 1 or greater, to ensure the companies are sufficiently liquid.
- Return on equity of 15% or greater, to ensure efficiency.
Here’s what my scan turned up:
|
Company
|
Market Capitalization (in billions)
|
Price-to-Earnings (TTM)
|
Price-to-Sales (TTM)
|
Price-to-Book (TTM)
|
Return on Equity (TTM)
|
Current Ratio
|
|
ABB (NYSE: ABB)
|
$25.5
|
5.7
|
0.77
|
2.0
|
35.1
|
1.6
|
|
ConocoPhillips (NYSE: COP)
|
$73.8
|
4.1
|
0.3
|
0.79
|
20.6
|
1
|
|
Corning
|
$13.9
|
2.5
|
2.16
|
1.04
|
42.6
|
2.5
|
|
II-VI
|
$0.57
|
8.2
|
1.71
|
1.84
|
23.2
|
5.9
|
|
Novartis (NYSE: NVS)
|
$105
|
13.5
|
2.48
|
2.08
|
15.1
|
1.2
|
|
Petroleo Brasileiro SA (NYSE: PBR)
|
$35.7
|
4.9
|
0.78
|
1.02
|
20.9
|
1.4
|
|
Transocean
|
$19.9
|
3.5
|
1.73
|
1.24
|
27.7
|
1.8
|
|
Woodward Governor (Nasdaq: WGOV)
|
$1.3
|
11.1
|
0.96
|
2.01
|
20.8
|
3.2
|
Since we began tracking our CAPS investment community in November 2006, five-star companies have outperformed the rest, with an average annualized gain of 12.1%.
It should be noted that the CAPS screener should be used only as a starting place for your stock research. Dig deeper and do your own due diligence to see if these stocks are right for your portfolio.
Start your search now at Motley Fool CAPS, because a sell-off of this magnitude may not be seen again for another 50 to 100 years.
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