When he wrote The Intelligent Investor and Security Analysis, Benjamin Graham provided details on his methods for selecting stocks. His student at Columbia’s business school, Warren Buffett, created Berkshire Hathaway and applied what he’d learned from Professor Graham.
A lot has changed since Graham and Buffett’s best days, but the basics still apply. If an investor can purchase a stock at a price below its book value, that’s basically good. Other factors enter into it, of course: is the company making money? Does it reward shareholders with dividends?
Here are four stocks that may fit these classic value stock guidelines. Obviously, more research is required but it’s a reasonable guess that this is a good start.
4 Below Book Value Stocks, Paying Dividends
Apple Hospitality REIT
Like many real estate investment trusts right now, the price chart shows a bounce off the early April low. A basic downtrend remains in place as the stock trades below both down trending 50-day and 200-day moving averages. The relative strength indicator (RSI, below the price chart) has moved out of the “oversold” range.
Apple Hospitality trades with a price-earnings ratio of 13.41, far below the p/e of the S&P 500 now at 34.22. The REIT can be purchased at 87% of its book value. The market capitalization is $2.84 billion. The debt-to-equity ratio is .49. Apple Hospitality pays an 8.23% dividend.
Fresh Del Monte Products
Thursday’s closing price broke above the early December high, just barely but that counts. Note the difference between the strength of this stock and the general lack of strength of the major indexes, despite last week’s bounce. Fresh Del Monte Produce trades above up trending 50-day and 200-day moving averages.
Market cap is $1.65 billion. The stock is available for purchase at a 17% discount from book value. The price-earnings ratio is a low 11.63. The debt-to-equity ratio is .21. Earnings this year are up 11.57% and up over the past five years by 16.59%. The farm produce company recently paid a dividend of 3.05%.
Permian Resources
The stock over the last two weeks bounced off the early April low. Now at $12.26, it has a long way to go to make it back to the November 2024 high of $16. The price remains below down trending 50-day and 200-day moving averages. Tariffs may be playing a role in the current drop.
The oil and gas exploration and development company trades at 94% of book value with a price-earnings ratio of 8.59. Market cap is $9.92 billion. The debt-t0-equity ratio is .47. This year’s earnings are down 1.42% and up over the past five years by 90.07%. Permian Resources offers investors a 4.89% dividend.
X Financial ADR
You can see how this China-based credit services firm peaked in March at just above $17.50, sold off into the early April stock market lows and has since bounced. Note that it now trades above an up trending 50-day moving average and above the 200-day moving average.
X Financial has a market cap of $452 million. The price-earnings ratio is 3.16 and the discount to book value is 31%. The debt-to-equity ratio is .05. Average daily volume of just 205,000 is relatively low for a New York Stock Exchange-listed stock. The company pays a 2.35% dividend.
Stats courtesy of FinViz.com. Charts courtesy of Stockcharts.com.
Read the full article here