8 Great Value Stocks With Solid Dividends Under 10 Times Earnings
The largest biotech in the world now is Gilead Sciences Inc. (NASDAQ: GILD). Its shares are still down $20 from the highs, and the controversy and rapid gains from Solvaldi for hepatitis C have created a value conundrum that just sounds dirt cheap for a big biotech outfit with high ambitions. Gilead’s future growth story is partly to blame here, as most of its growth has happened, but it is valued at only about nine times earnings expectations for 2015 and 2016.
Gilead shares were recently trading at $105.49, handily below its consensus analyst price target of $125.06. The stock has 52-week trading range of $85.95 to $123.37 and a market cap of $155 billion. Its dividend yield is 1.6%.
International Business Machines Corp. (NYSE: IBM) screens as cheap, and Warren Buffett may be its biggest cheerleader, but many investors know this “cheapness” is due to financial engineering. IBM has had no growth of late and it continues to manage earnings per share via buybacks and cost cuts. Still, IBM is valued at only about nine times an average of 2015 and 2016 earnings expectations. Restructuring opportunities continue to be available, and if things continue this way there could be a management change ahead.
Big blue shares closed most recently at $143.66, in its 52-week trading range of $140.62 to $192.50. The consensus analyst price target is $158.75. It has a dividend yield of 3.6% and a market cap of about $141 billion.
MetLife Inc. (NYSE: MET) is now no longer treated as though it is a bank, but the insurance and financial services giant has a valuation that makes investors scratch their heads. After all, does less than eight times expected average earnings for 2015 and 2016 sound right? The problem is that earnings growth has stalled in 2015, and its sell-off of over 20% from recent highs may boil down to a perceived interest rate risk for when interest rates do finally rise.
Shares of MetLife closed at $46.52 on Wednesday. The consensus price target is $60.07, and the 52-week trading range is $44.49 to $58.23. It has a dividend yield of 3.2% and a market cap of $52 billion.
Seagate Technology PLC (NASDAQ: STX) always screens cheaply because disk drives and storage just keep getting cheaper. Consumers can now buy a 1 terabyte external drive for $50 to $60. Still, solid state drives and other storage efforts keep Seagate going. The stock has lost more than one-third of its value, it has a monster dividend yield after that selling pressure, and it is valued at less than nine times trailing and expected earnings. Seagate is technically Irish, but most of its investors are U.S.-based.
Seagate shares were recently trading at $43.55 and have a 52-week range of $42.96 to $69.40. The consensus price target is $54.95. The market cap is $13 billion and the dividend yield is 4.7%.
This one may not be in an exciting industrial segment due to making products and systems for rail, highway, construction and barges, but Trinity Industries Inc. (NYSE: TRN) is behind much of America’s infrastructure in one way or another. Barron’s recently pointed out a lack of growth here, and earnings are expected to fall handily in 2016. Still, Trinity is valued at about five times expected 2015 earnings and is valued at less than six times 2016 expected earnings.
Shares of Trinity closed at $23.96, way below its consensus analyst price target of $35.56. The 52-week trading range is $21.79 to $48.46, and the market cap is $3.7 billion. It has a dividend yield of 1.7%.
Valero Energy Corp. (NYSE: VLO) is in the refining segment, so it rarely gets the higher multiple that oil exploration and productions outfits get historically. Still, it is believed to be somewhat insulated from the woes of low oil prices and it is a serious leader in its field among peers. Valero also brings a decent dividend yield that has serious room to be increased ahead. It is valued at about seven times expected 2015 earnings, but due to an expected earnings drop it is valued at almost nine times expected 2016 earnings.
Valero shares closed at $59.82, in its 52-week range of $42.53 to $71.50. The consensus price target is $77.36. It has a dividend yield of 2.7% and a market cap of $30 billion.
Again, “cheap stocks” are generally cheap for a reason. That is why we evaluated each potential eye-sore here in the sector or the company. Cheap stocks also tend to either languish or often get even cheaper against the market or peers before they turnaround. There are many other ways to establish value as well.