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6 Cheap Stocks With Low Price-Earnings Ratios

- By Tiziano Frateschi

The following stocks have low price-earnings ratios and have been bought by gurus. While some of them are great investments, others need to be checked again, according to the discounted cash flow calculator.

With a market cap of $9.19 billion, Lear Corp. (LEA) is trading with a price-earnings ratio of 8.56 and a price-book ratio of 2.27. Shares have fallen 24% over the last 12 months and are now trading 28.63% below the 52-week high and 28.69% above the 52-week low.


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GuruFocus gave the manufacturer of automotive seating and electrical systems a profitability and growth rating of 8 out of 10. The return on equity of 26.69% and return on assets of 9.50% are outperforming 83% of companies in the Global Auto Parts industry. Its financial strength is rated 7 out of 10. The cash-debt ratio of 0.76 is above the industry median of 0.61.

The company's largest guru shareholder is Richard Pzena (Trades, Portfolio) with 4.42% of outstanding shares, followed by Jim Simons (Trades, Portfolio)' Renaissance Technologies with 0.37% and Joel Greenblatt (Trades, Portfolio) with 0.15%.

With a $9.53 million market cap, United Rentals Inc. (URI) is trading with a price-earnings ratio of 9.17 and a price-book ratio of 2.84. According to the DCF calculator, the stock has a fair value of $140.83 while trading at $121. Shares have fallen 32% over the last 12 months. They are currently trading 33.40% below the 52-week high and 28.32% above the 52-week low.

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GuruFocus gave the company, which rents equipment to industrial companies, a profitability and growth rating of 7 out of 10. The return on equity of 34.11% and return on assets of 6.91% are outperforming 90% of companies in the Global Rental and Leasing Services industry. Its financial strength is rated 4 out of 10. The equity-asset ratio of 0.19 is below the industry median of 0.48.

Pioneer Investments (Trades, Portfolio) is the company's largest guru shareholder with 2.98% of outstanding shares, followed by David Carlson (Trades, Portfolio) with 0.89% and Ray Dalio (Trades, Portfolio) with 0.70%.

With a market cap of $21.84 billion, Concho Resources Inc. (CXO) is trading with a price-earnings ratio of 8.38 and a price-book ratio of 1.16. According to the DCF calculator, the stock has a fair value of $139.12 while trading at $109. Shares have tumbled 22% over the last 12 months and are currently trading 32.25% below the 52-week high and 16.68% above the 52-week low.

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GuruFocus rated the oil and natural gas producer's profitability and growth 6 out of 10. The return on equity of 17.57% and return on assets of 12.11% are outperforming 79% of companies in the Global Oil and Gas E&P industry. Its financial strength is rated 6 out of 10. The cash-debt ratio of 0.01 is below industry median of 0.51.

The company's largest guru shareholder is Dodge & Cox with 1.94% of outstanding shares, followed by Spiros Segalas (Trades, Portfolio) with 0.60% and Steven Cohen (Trades, Portfolio) with 0.41%.

Phillips 66 (PSX) has a market cap of $43.18 billion and is trading with a price-earnings ratio of 7.99 and a price-book ratio of 1.77. According to the DCF calculator, the stock has a fair value of $127.46 while trading at $97. Shares have fallen 4% over the last 12 months and are trading 23.34% below the 52-week high and 21.16% above the 52-week low.

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GuruFocus gave the oil refiner a profitability and growth rating of 5 out of 10. The return on equity of 23.79% and return on assets of 10.30% are outperforming 70% of companies in the Global Oil and Gas Refining and Marketing industry. Its financial strength is rated 7 out of 10. The cash-debt ratio of 0.27 is below the industry median of 0.61.

With 3% of outstanding shares, Barrow, Hanley, Mewhinney & Strauss is the company's largest guru shareholder, followed by Warren Buffett (Trades, Portfolio with 2.61% and Simons' firm with 0.34%.

Lithia Motors Inc. (LAD) has a market cap of $2.19 billion. Class A shares are trading with a price-earnings ratio of 8.72 and a price-book ratio of 1.87. According to the DCF calculator, the stock has a fair value of $116.15 while trading at $94.8. Shares have fallen 8% over a 12-month period and are currently trading 10.26% below the 52-week high and 39.62% above the 52-week low.

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The company, which sells new and used vehicles, has a GuruFocus profitability and growth rating of 7 out of 10. The return on equity of 23.01% and return on assets of 5.21% are outperforming 61% of companies in the Global Auto and Truck Dealerships industry. Its financial strength is rated 5 out of 10. The cash-debt ratio of 0.01 is below the industry median of 0.61.

The company's largest guru shareholder is David Abrams (Trades, Portfolio) with 9.94% of outstanding shares.

LyondellBasell Industries NV (LYB) has a market cap of $33.62 billion; the stock is trading with a price-earnings ratio of 6.06 and a price-book ratio of 3.32. According to the DCF calculator, the stock has a fair value of $160.31 while trading at about $91. Shares have tumbled 33% over the last 12 months and are currently trading 24.13% below the 52-week high and 16.85% above the 52-week low.

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GuruFocus rated the petrochemical producer's profitability and growth 7 out of 10. The return on equity of 46.28% and return on assets of 17.10% are outperforming 97% of companies in the Global Specialty Chemicals industry. Its financial strength is rated 6 out of 10. The cash-debt ratio of 0.13 is below the industry median of 0.72.

With 0.72% of outstanding shares, Pioneer Investments is the company's largest guru shareholder, followed by Simons' firm with 0.33%, Larry Robbins (Trades, Portfolio with 0.26% and Dalio with 0.19%.

Disclosure: I do not own any stocks mentioned.

Read more here:

  • 6 Companies Growing Earnings Per Share
  • 6 Stocks Outperforming the Market
  • 6 Poorly Performing Stocks in Gurus' Portfolios


This article first appeared on GuruFocus.