Let’s take a look at five stocks that are selling at price-to-earnings ratios below their industry averages. Specifically, I am interested in those that yield 3% or more so that dividend investors can get ample yield going forward. Each of these five names is cheap on a valuation basis (and therefore on sale), and, with the exception of Whirlpool (WHR), each one has a catalyst that is enough of a reason to buy now.
JPMorgan Chase (JPM)
By nearly every measure, JPM is the crème de la crème of the large money center banks. At the time of this writing, JPM is trading on the NYSE at $37, near the midpoint of its 52-week range of $48.36 to $27.85. Its market capitalization is $141.5 billion, and its current P/E ratio is roughly 8. JPM slashed its dividend in the 2009 banking crisis to just $0.05 per quarter. It has since been raised to $0.25 per quarter, giving it an annual yield of 3.0%.
JPM’s managements team has adroitly managed it. So too has JPM’s reach across retail banking, credit cards, and investment banking helped to even out earnings, even though the past several years have seen the failure of several of JPM’s peers. Even in the horrid environment for most banks in 2010, JPM’s return on assets was 0.82%, and its earnings, despite a somewhat disappointing third quarter, may actually set an all time record for JPM in 2011. For comparison’s sake, Bank of America (BAC) lost money in 2010, and Citigroup (C) posted a 0.55% return on assets in 2010. To continue reading, click here