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3 Dirt Cheap Stocks
With all the talk of stocks being overvalued due to the massive rally we've seen since March, you'd think there'd be almost no dirt cheap stocks. You know what I'm talking about. I mean really cheap. Stocks with single digit P/Es and price-to-book ratios well under 1.0.
But what if I told you that there's one sector where there's not just one dirt cheap stock, but many of them. And as an added bonus, these dirt cheap stocks also have a Zacks Rank of #1 or #2, which means they have rising earnings estimates.
Too good to be true?
Nah. You just have to know where to look.
Dirt Cheap Stocks are Not the Techs
To find the dirt cheap stocks in this market you have to get over your obsession with tech stocks, energy plays and, as hard as it is, even the drybulk shippers.
Because our dirt cheap stocks are found in the insurance sector. Yes, insurance.
Not glamorous enough for you?
These 3 dirt cheap stocks have an average forward P/E of just 6.14 and an average price-to-book ratio of 0.84. Enough said.
3 Dirt Cheap Stocks - And They Pay Dividends Too
PartnerRe Ltd. (PRE - Analyst Report) is a global reinsurer of, among other things, property, casualty, agriculture, aviation/space, catastrophe, marine, life/annuity and energy risks. On Oct 26, it reported third quarter results that beat the Zacks Consensus Estimate by 44.98%. It was the third consecutive beat.
With a low level of large losses in the quarter, aided by the quiet hurricane season, the company's reinsurance and capital markets segments performed well.
Analysts like what they heard as 8 out of 12 raised 2009 estimates in the last month. Over the past 90 days, 2009 estimates jumped 22.4% to $12.68 from $10.36 per share. Analysts expect 2009 earnings growth of 50.22%.
PartnerRe's Cheap Stock Credentials
The company has a forward P/E of just 6.12 and sports a price-to-book ratio of 0.83. The PEG ratio is also only 0.64.
PartnerRe is a Zacks #2 Rank (buy) stock. The current dividend yield is 2.40%. Check out the 2-year chart:
Platinum Underwriter Holdings, Ltd. (PTP - Snapshot Report) is also a reinsurer, providing property, casualty and finite risk reinsurance coverage worldwide. On Oct 21, the company easily beat the Zacks Consensus Estimate for the third quarter by 15.17%. Net income was a record. The results were boosted by lower than expected catastrophe activity and strong investment results.
Analysts are bullish on Platinum Underwriter as 2 out of 5 have raised full year estimates in the last 30 days. The 2009 Zacks Consensus jumped to $5.89 from $5.76 per share in that time. Analysts expect 2009 earnings growth of 62.76%.
Platinum Underwriter Holdings Cheap Stock Credentials
The company has a forward P/E of 6.17 and a price-to-book ratio of 0.83. Its PEG ratio is just 0.58.
The company is a Zacks #2 Rank (buy) stock. As an added bonus, it is yielding a dividend of 0.90%. Take a look at the 2-year chart action:
Delphi Financial Group, Inc. (DFG - Analyst Report) is in a different segment of the insurance industry than the other two dirt cheap stocks. It provides employee benefit services and offers group insurance coverages for long-term and short-term disability, life, excess workers compensation for self insured employers, travel accident, dental and limited benefit health insurance.
On Oct 27, the company reported third quarter results and surprised on estimates for the fourth straight quarter. Earnings per share rose 284% from the year ago period to $1.00 per share from 26 cents.
Improved investment results boosted the quarter as the company saw improved yields in its fixed income portfolio. Investment income rose 357% to $88.7 million from $19.4 million in the third quarter of last year.
Analysts like what they see for the rest of 2009. 6 out of 8 analysts have raised full year estimates in the last month, boosting the Zacks Consensus to $3.74 from $3.51 per share. Analysts expect year over year earnings growth of 93.72%.
Delphi Financial Group's Cheap Stock Credentials
Delphi Financial has a forward P/E of 6.12 and a price-to-book of 0.86. Its PEG ratio is only 0.51.
The company is a Zacks #1 Rank (strong buy) stock. It rewards shareholders with a dividend of 1.70%. See the 2-year chart below:
Ways to Search for Dirt Cheap Stocks
Zacks Custom Screener - This is the place to start to create your own screens to find dirt cheap stocks.
Research Wizard - This sophisticated tool will allow you to search for a detailed list of companies with dirt cheap stock characteristics such as low PEG and P/E ratios as well as other value indicators like low P/S and P/B ratios.
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| Market Summary | Feb 09, 2010 22:26 pm ET |
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