There’s not too much interest in value stocks right now as growth stocks continue to have more than just a day in the sun. If you have a contrarian frame-of-mind, then price/earnings ratios of much less than 100 and a balance sheet of more equity than debt might be of interest, as outrageous and dated as it sounds.
It’s impossible to say when this extraordinary growth cycle finally comes to an end. Typically, something unexpected triggers a change and what was hot can suddenly become ice cold. The value investor ignores that cycle and sticks with the old school view that a low p/e and a positive balance sheet might be starting points.
Each of these 4 stocks have that value stock look and feel. Each pay a dividend yield greater than the one you might receive from the United States Treasury’s 30 year bond. Naturally, there is more risk in a stock’s dividend than in the yield of a government instrument. Typically, anyway.
Cathay General Bancorp
With a price/earnings ratio of 8.2 while the Standard & Poor’s Schiller p/e is 31, this bank looks to be a fit for value stock status. This is confirmed when you consider that Cathay General is trading at an 18% discount from book.
The 5-year record of earnings is good and this year’s earnings look decent even with a 2nd quarter loss kicking in. Shareholder equity exceeds long-term debt. The dividend yield comes to 5% at this price. Average daily volume is relatively light at 379,000 shares.
Columbia Banking System is another NASDAQ-traded stock, this one with headquarters in Tacoma, Washington.
With shares available for purchase at just 86% of book and with a price/earnings ratio of just 13, this one may be making value stock screens along Wall Street. Along with many other stocks, 2nd quarter earnings are hurting, but last year’s look good and the 5-year record is solidly positive.
Long-term debt is less than shareholder equity. Columbia pays a 4.03% dividend. At 412,000 shares, average daily volume is definitely lighter than NYSE big bank stocks.
Employers Holdings is New York Stock Exchange-listed, in the worker’s compensation insurance business and based in Reno, Nevada.
The stock trades at a bargain basement 15% discount from book and the price/earnings ratio is a low 11. Last year’s earnings were good and the 5-year earnings record is positive. Employers serves the small business market — how badly this market is being hit by Covid-19 concerns would be the question.
Meantime, their dividend is 3.11% and shareholder equity exceeds long-term debt. Average daily volume of just 217,000 shares might make it difficult for large institutional investors to participate but that doesn’t keep it from possibly being a value.
First Midwest Bankcorp is traded on the NASDAQ and recently re-located headquarters from Joliet to Chicago.
With a price/earnings ratio of only 9 and available for purchase at just 57% of book, it’s highly likely that First Midwest is appearing on value stock screens. Analysts expect earnings to take a hit this year, but last year’s were good and the 5-year record is positive.
Long-term debt is less than shareholder equity. The dividend is 4.58%. Average daily volume of 655,000 shares makes it a bit more accessible to larger investors than those stocks listed above, but not much more.
These are not buy recommendations. These stocks fit the basic ingredients for value in the classic sense of the word and it’s likely they’ll be showing up on the screens of those investors looking for such a thing.
Stats courtesy of FinViz.com.
I do not hold positions in these investments. No recommendations are made one way or the other. If you’re an investor, you’d want to look much deeper into each of these situations. You can lose money trading or investing in stocks and other instruments. Always do your own independent research, due diligence and seek professional advice from a licensed investment advisor.