Chicago, IL- March 17, 2015 – Today, Zacks Investment Ideas feature highlights Features: JA Solar (JASO-Free Report), General Motors (GM-Free Report) and Mercer (MERC-Free Report).
3 Dirt-Cheap Stocks to Buy Now
With all the talk of stocks being overvalued due to the massive rally we've seen since 2009, you'd think there'd be almost no dirt cheap stocks.
You know what I'm talking about. I mean really cheap. Stocks with single digit P/Es and price-to-book ratios well under 3.0.
While it's harder to find them now than a few years ago, they do still exist if you dig deep.
As an added bonus, there are dirt cheap stocks that also have a Zacks Rank of #1 or #2, which means they have rising earnings estimates.
Too good to be true?
Nope. You just have to know where to look.
Dirt Cheap Stocks are Not the Techs
To find the dirt cheap stocks in this market you have to get over your obsession with energy plays and, as hard as it is, even the dry bulk shippers, which appear "cheap" but which are still struggling to produce earnings.
No, you're not going to get a hot restaurant stock or one of the big technology titans super cheap anymore. But value investors know to look beyond the obvious companies for hidden gems.
These 3 dirt cheap stocks have an average forward P/E of just 7.3 and an average price-to-book ratio of 1.4. That is well below the average forward P/E of the S&P 500 at 16.3 and its average price-to-book of 6.2.
All 3 companies are also expected to grow earnings by the double digits this year. It's rare to find a dirt cheap stock that is also a growth stock. Growth and value is a powerful combination.
3 Dirt Cheap Stocks to Buy Now
1. JA Solar Holdings Co, Ltd.
2. General Motors Company
3. Mercer International Inc.
1. JA Solar (JASO-Free Report)
JA Solar is a a Chinese-based maker of solar power products. The solar industry appears to be turning around after several tough years. In fiscal 2014, total shipments jumped 47.6% and gross margin rose to 15.6% from 10.6% in fiscal 2013.
Recently, JA Solar announced it would supply 35.1 MW of modules to the second phase of a Guatemala solar farm that is one of the largest solar farms in Central America.
Forward P/E = 7
Price-to-Book (P/B) Ratio: 0.5
Expected 2015 earnings growth = 48%
PEG = 0.3
Zacks Rank #1 (Strong Buy)
2. General Motors (GM-Free Report)
General Motors is one of the largest automobile manufacturers in the world. The company came out of bankruptcy after the Great Recession but has been dealing with a faulty ignition switch controversy.
Auto sales remain strong in North America and appear to be finally recovering in Europe. General Motors has reported 59 consecutive months of year over year sales gains.
Forward P/E = 8.3
P/B Ratio: 1.7
Expected 2015 earnings growth = 50.6%
PEG = 0.5
Zacks Rank #2 (Buy)
3. Mercer (MERC-Free Report)
Mercer is a global pulp manufacturer. In 2014, it achieved a new pulp production record, led by record production at its Stendal mill.
It has been benefiting from the stronger US dollar as its operating costs are primarily incurred in Euros and Canadian dollars. However, that advantage is expected to lessen this year as the strong US dollar is putting pressure on pulp prices.
Forward P/E = 6.8
P/B Ratio: 2.0
Expected 2015 earnings growth = 34%
Zacks Rank #1 (Strong Buy)
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JA SOLAR HOLDGS (JASO): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis Report
MERCER INTL SBI (MERC): Free Stock Analysis Report
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