There are a number of great companies in the market today. By using the ModernGraham Valuation Model, I've selected the ten lowest PEmg (price / normalized earnings) companies reviewed by ModernGraham. Each company has been determined to be undervalued and suitable for the Defensive Investor according to the ModernGraham approach.
Defensive Investors are defined as investors who are not able or willing to do substantial research into individual investments, and therefore need to select only the companies that present the least amount of risk. Enterprising Investors, on the other hand, are able to do substantial research and can select companies that present a moderate (though still low) amount of risk. Defensive Investors may also be interested in reviewing 10 Most Undervalued Companies for the Defensive Investor – September 2015 while also conducting further research into the following companies.
Be sure to check out the archive of this screen! Here are the 10 Low PE Stocks for the Defensive Investor:
Graham Holdings Company (GHC)
Graham Holdings Company qualifies for both the Defensive Investor and for the Enterprising Investor. The Defensive Investor is only concerned with the inconsistent dividend history. The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach based on Benjamin Graham's methods should feel comfortable proceeding with further research into the company.
As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $18.06 in 2011 to an estimated $70.23 for 2015. This level of demonstrated earnings growth outpaces the market's implied estimate of 0.06% annual earnings loss over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value above the price. (See the full valuation)
FMC Corporation (FMC)
FMC Corporation qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor's only initial concern is the low current ratio while the Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all value investors following the ModernGraham approach based on Benjamin Graham's methods should feel comfortable proceeding with further research into the company.
As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.80 in 2011 to an estimated $3.85 for 2015. This level of demonstrated earnings growth outpaces the market's implied estimate of 1.14% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value above the price. (See the full valuation)
