Markets & Finance

Stock Screens: STARS on Sale


S&P's latest list features 20 highly ranked names trading well below their average p-e ratios

From Standard & Poor's Equity ResearchStocks have certainly taken their lumps in recent weeks. For the less-fearful investors out there—the buy-the-dips crowd—any time prices go down, valuations fall and the market is filled with interesting opportunities.

That was the thinking behind this week's screen. To start out, we decided to focus on perhaps the most widely known valuation measure, price-to-earnings ratio. We searched for stocks currently trading at least 50% below their average p-e ratio over the past five years. (We excluded any stocks that had negative p-e ratios or p-e ratios with values above 100 for any period.)

But just because a stock is cheap doesn't mean it's attractive. To make sure that the names on our list had added appeal, we next screened for those ranked 4 STARS (buy) or 5 STARS (strong buy) under Standard & Poor's qualitative stock ranking system. Stocks with those designations are expected to outperform the S&P 500 index on a total return basis over the coming 12 months, with shares rising in price on an absolute basis.

Twenty stocks made the cut. Not surprisingly, a number of names from the S&P Financials sector, which has seen heavy selling in recent weeks, turned up. A few pharmaceutical and energy companies also appear on the list.

Company

Ticker

S&P STARS Rank

ACE

ACE

4

ALLIANT ENERGY

LNT

4

ALLSTATE

ALL

5

AMERICAN CAPITAL STRATEGIES

ACAS

5

BJ SERVICES

BJS

4

CHUBB

CB

5

DR REDDYS LABS ADR

RDY

4

ENSCO INTERNATIONAL

ESV

4

HELIX ENERGY SOLUTIONS GROUP

HLX

4

INGRAM MICRO

IM

4

JPMORGAN CHASE

JPM

4

LOCKHEED MARTIN

LMT

4

MERRILL LYNCH

MER

4

NABORS INDUSTRIES

NBR

4

NOBLE

NE

5

PNC FINANCIAL SVCS GROUP

PNC

4

PROLOGIS

PLD

4

TEVA PHARM INDS ADR

TEVA

5

TRAVELERS

TRV

4

VALERO ENERGY

VLO

4

Kaye, a chartered financial analyst, is an analyst for Standard Poor's Portfolio Services.

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