Companies With Historic Low PEs - Victims of Supply Chain/Labor Shortage (trading, cash)

[Lincolnian]

The supply chain problems and labor shortages have led to many established companies to trade at historically low PE rates. Many of these companies are still growing earnings and have solid cash flows yet the market is pricing many of these companies as if they have no future prospects. Included in this list are companies like Intel and Cisco, many banks and financials like Bank of America and JP Morgan, automobile manufacturers like Ford and GM, commodity companies like DOW and International Paper, pharmaceuticals like Pfizer, and many others. Many also pay dividends of $3.5% or more. Even moving into a recession many of theses companies are far below their PEs moving into previous downturns yet are in better financial shape. Additionally, areas like automobiles are significantly undersupplied at the moment. Many people absolutely need to buy a car after years of no available supply. Ford and GM are both significantly producing electric vehicle alternatives at the price points that are most affordable to the masses.

Is market too dependent on the novel and new tech to the point that the blood and bones of the economy is being ignored and left behind?

These are just a few of literally hundreds of stocks with solid earnings that are solid global companies. Share your examples.

[treasurekidd]

BRK-B, TROW and WSM. Long and adding to all three.

[treasurekidd]

Originally Posted by treasurekidd

BRK-B, TROW and WSM. Long and adding to all three.

I would also add home builders and insurers to the list, and TSN in the food space as well.

[hikernut]

Good thread. Yes, the market has already decided we are having a recession. Plenty to choose from in the financial space. I'll mention Goldman Sachs which trades at a modest discount to book value today. Also Blackrock and Schwab. They're trading well below the fair value estimates I see.

Add semiconductors to the list. Many are trading at 10-15 times earnings. Intel has its own company-specific issues, but most companies in this industry are in great financial shape, with huge backlogs plus the ability to pass along some price increases.

I'm not a fan of the legacy auto companies. Instead, I'll choose to stick with things like Deere, which is at about 14x earnings today. Cummins has a p/e around 10.

Then there are small caps. I don't follow individual companies in this area, but the forward PEs are very, very low today. The S&P 600 is almost as cheap (i.e., earnings multiple) as it was at the bottoms reached in both 2008 and 2020. See the charts from Ed Yardeni...

https://www.yardeni.com/pub/stockmktperatio.pdf