Maximum Pessimism: Staples, HP and Two Other Cheap Stocks Setting New Lows

The late, great investor Sir John Templeton was fond of buying low-PE shares that the rest of us were sour on. He passed away in July 2008 -- too soon, unfortunately, to feast on the remarkable deals that emerged the following October during the financial panic.

But if you share Templeton’s love of hated stocks, there are plenty around that are setting new 52-week lows. I’ve found four that are also priced near or below their 2008 nadirs, offering above-average dividend yields and trading for less than 8.2 times projected EPS this year.

They are Hewlett Packard (HPQ), the Palo Alto, Calif., tech conglomerate, Vale S.A. (VALE), the Brazilian basic materials conglomerate, Elbit Systems (ESLT), the Israeli designer and manufacturer of defense systems, and Staples (SPLS), the office-supply retailer based in Farmingham, Mass.

HPQ Chart

HPQ data by YCharts

All four shares pay dividends that are well covered by their projected earnings in 2012 and 2013:

HPQ Dividend Yield Chart

HPQ Dividend Yield data by YCharts

Elbit Systems and Hewlett Packard are probably carrying too much leverage. But the other two are not overburdened by debt:

HPQ Debt to Equity Ratio Chart

HPQ Debt to Equity Ratio data by YCharts

None of these companies is in high-growth mode. But neither are their revenues in a nosedive:

HPQ Revenue TTM Chart

HPQ Revenue TTM data by YCharts

Just so you have a better view of that chart, let’s see it as a percentage change:

HPQ Revenue TTM Chart

HPQ Revenue TTM data by YCharts

If you’re fond of catching what Wall Street likes to dismiss as “falling knives,” these four stocks are worth a closer look.

Stephane Fitch is an editor for the YCharts Pro Investor Service which includes professional stock charts, stock ratings and portfolio strategies.



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