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Stingy Investor Tip Sheet

Low PE10 Stocks

While collecting data to look for Montier's high-risk stocks, I picked up P/E10 data. The P/E10 ratio is like the regular price-to-earnings ratio (P/E) but it uses average earnings over the last 10 years instead of earnings over the last year.

There is also some evidence that P/E10 ratios do a better job of highlighting cheap (or expensive) stocks. The regular P/E ratio tends to vary wildly from quarter to quarter but the P/E10 ratio tends to provide a smoother look at a company's long-term earnings tend.

I look for bargains by first screening for Canadian stocks with P/E10 ratios of less than 10. I also demand debt-to-equity ratios of less than 100%. Finally, I sorted the resulting list from large to small based on market capitalization.

BCE, the old favourite of 'widows and orphans', tops the list . . .

Name			 Price	P/E10  D/E(%)
======================== ====== ===== =======
BCE (BCE)		 $25.60	 6.4	76.1
TECK COMINCO (TCK.B)	  $5.95	 3.9	16.9
SEARS CANADA (SCC)	 $20.08	 9.5	26.1
WEST FRASER TIMBER (WFT) $28.71	 8.7	29.7
INMET MINING (IMN)	 $22.75	 7.7	23.1
SHERRITT INT (S)	  $2.92	 3.5	49.6
AGF MANAGEMENT (AGF.B)	  $8.40	 6.8	13.1
TRANSCONTINENTAL (TCL.B)  $8.38	 7.3	72.0
TORSTAR (TS.B)		  $8.11	 8.8	73.8
PARAMOUNT (POU)		  $7.48	 8.1	10.8
Source: Bloomberg, January 28, 2009

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01/30/2009   11:15 PM EST   Permlink   save & shareStocks

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