5/14/2013

The Cheapest Basic Material Dividend Stocks | 20 Low Priced Raw Material Shares


Basic material dividend stocks with low forward P/E’s originally published at "long-term-investments.blogspot.com". Yesterday I read an interesting article about the valuation of the market. We got a gaining momentum. This year alone, the market rose around 15 percent and nobody scares this. The analysts from Bloomberg attempted to compare the situation with the second half of the 90ies where stocks started to boost until they burst. Historically we named this burst the technology bubble 2000.

The analyst wrote that the current valuation is still 28 below the mid 90ies. The market is not cheap but not expensive. Other investors talk about a reasonable pricing. They trust the market environment and the FED stimulus and they pay finally the high price.

I’m a long-term growth investor and I’ve also realized that most of the high-quality stocks are too expensive to get a good return. With P/E’s of 20 you will definitely make no greater return. Sure, it could be possible that your investment got a 30 P/E in five years or so but that’s not investing, it’s speculation.

As you might have seen, I started more screens with cheap price ratios as variables. I still try to seek the cheapest opportunities from the market, but there are only a dozen from each sector. Today I like to discover some ideas from the basic material sector. I’m focused on large caps in my screen.

Basic material stocks are still very cheap. The 20 stocks with lowest valuation can be purchased for a multiple between 4 and 9 of expected earnings. That’s very low compared to my other screens. But you should also know that valuation is a question of belief – Do you trust the earnings forecasts?

Here are my favorite stocks:
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BP (NYSE:BP) has a market capitalization of $136.72 billion. The company employs 85,700 people, generates revenue of $388.285 billion and has a net income of $11.816 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $39.891 billion. The EBITDA margin is 10.27 percent (the operating margin is 5.08 percent and the net profit margin 3.04 percent).

Financial Analysis: The total debt represents 16.26 percent of the company’s assets and the total debt in relation to the equity amounts to 41.21 percent. Due to the financial situation, a return on equity of 10.07 percent was realized. Twelve trailing months earnings per share reached a value of $6.99. Last fiscal year, the company paid $1.98 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 6.16, the P/S ratio is 0.35 and the P/B ratio is finally 1.16. The dividend yield amounts to 4.88 percent and the beta ratio has a value of 1.20.


Long-Term Stock Price Chart Of BP (BP)
Long-Term Dividend Payment History of BP (BP)
Long-Term Dividend Yield History of BP (BP)

Vale (NYSE:VALE) has a market capitalization of $86.68 billion. The company employs 70,785 people, generates revenue of $47.694 billion and has a net income of $6.255 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $18.892 billion. The EBITDA margin is 39.61 percent (the operating margin is 19.34 percent and the net profit margin 13.11 percent).

Financial Analysis: The total debt represents 24.49 percent of the company’s assets and the total debt in relation to the equity amounts to 43.37 percent. Due to the financial situation, a return on equity of 9.33 percent was realized. Twelve trailing months earnings per share reached a value of $1.24. Last fiscal year, the company paid $1.15 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 13.53, the P/S ratio is 1.84 and the P/B ratio is finally 1.17. The dividend yield amounts to 4.87 percent and the beta ratio has a value of 1.46.

Long-Term Stock Price Chart Of Vale (VALE)
Long-Term Dividend Payment History of Vale (VALE)
Long-Term Dividend Yield History of Vale (VALE)

Rio Tinto (NYSE:RIO) has a market capitalization of $85.36 billion. The company employs 71,219 people, generates revenue of $50.967 billion and has a net income of $-2,997.00 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $16.208 billion. The EBITDA margin is 31.80 percent (the operating margin is -7.08 percent and the net profit margin -5.88 percent).

Financial Analysis: The total debt represents 22.81 percent of the company’s assets and the total debt in relation to the equity amounts to 57.23 percent. Due to the financial situation, a return on equity of -6.00 percent was realized. Twelve trailing months earnings per share reached a value of $-1.66. Last fiscal year, the company paid $1.67 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is not calculable, the P/S ratio is 1.77 and the P/B ratio is finally 1.82. The dividend yield amounts to 3.58 percent and the beta ratio has a value of 1.65.

Long-Term Stock Price Chart Of Rio Tinto (RIO)
Long-Term Dividend Payment History of Rio Tinto (RIO)
Long-Term Dividend Yield History of Rio Tinto (RIO)


Take a closer look at the full list of the cheapest basic material dividend stocks. The average P/E ratio amounts to 10.13 and forward P/E ratio is 7.42. The dividend yield has a value of 2.77 percent. Price to book ratio is 1.31 and price to sales ratio 1.09. The operating margin amounts to 15.70 percent and the beta ratio is 1.31. Stocks from the list have an average debt to equity ratio of 0.44.

Here is the full table with some fundamentals (TTM):

Low Valuated Basic Material Dividend Stocks (Click to enlarge)

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Related stock ticker symbols:
GGB, ABX, RIO, VLO, CEO, VALE, MPC, TOT, PKX, SNP, FCX, BP, ESV, PBR, PBR-A, CF, STO, IMO, APA, PSX

Selected Articles:


* I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I receive no compensation to write about any specific stock, sector or theme.


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