Low P/E Ratio Bargain Stocks

Despite the fact that the S&P 500 is trading at twenty times earnings there are still bargain stocks. Ignore Amazon which has gone up 115% this year and Netflix which has gone up 151%. Look for low P/E ratio bargain stocks with room to grow. This is exactly what USA Today has done and reported in its article about stocks that are still dirt cheap.

Eight stocks in the Standard & Poor’s 500 index, including Goodyear Tire & Rubber (GT), oil refiner Valero Energy (VLO) and food processor Mondelez (MDLZ) have jumped 15% or more this year and are still dirt cheap compared with the market, according to a USA TODAY analysis of data from S&P Capital IQ. Each of these stocks is trading for less than 11 times their diluted earnings over the past 12 months. Compare that with the S&P 500, which is trading for an above-average 20 times earnings the past 12 months, according to S&P Dow Jones Indices.

This is the complete list for S&P 500 stocks with promising growth and low P/E ratios. Listed are the company name, stock symbol, P/E ratio and year to date growth.


Company Symbol Price to Earnings Ratio Year to Date Growth
Goodyear Tire & Rubber




Valero Energy








Marathon Petroleum








First Solar








Phillips 66





Rather than betting that Amazon.com with a P/E ratio of around 900 will continue to grow at the same pace, consider some of these low P/E ratio bargain stocks.

P/E Ratio and Not Price

Please notice that we are not suggesting cheap or penny stocks. We wrote about that issue just two weeks ago.

It is the mistaken belief of naive investors that these stocks have nowhere to go but up. If you have unique insight into the company you may know something that stock analysts do not. This can be very profitable. If you do not have any special insight into the stock you may be in for a rude awakening when the stock that sold for pennies now is out of business.

The point of watching the P/E ratio is that a company needs to be running a profit in order to have a P/E ratio at all. And if it has a higher P/E ratio it indicates that the market has not yet bid up the stock price to unsustainable levels.

But, Beware of Debt

When we wrote about the risk of higher interest rates we noted that there has been a flight to quality, and less debt. Companies with a lot of debt will get hurt as interest rates rise.

The recent mini rally has put the U.S. stock market back on track, right? Maybe that is not the case. Companies with investment grade credit rating are being bid up and those with worse credit and seen as at risk are in decline.

So, while you are looking at low P/E ratio bargain stocks read the financials and make sure that the company is not deeply in debt. Otherwise, buy growing companies with low P/E ratios and avoid companies that are bound to correct from unsustainable price levels.

Low P/E Ratio Bargain Stocks PPT

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