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10 Top-Rated Stocks With Low P-E Ratios

http://biz.yahoo.com/special/pe103006_article1.html


The price-to-earnings ratio is perhaps the most common valuation tool used by investors, but it can be misused. For example, some investors think they’re getting a great value simply because a stock has a low P-E ratio. Often times, however, a low P-E is due to deteriorating fundamentals. The stocks on this week’s list have a potent combination of low valuations and healthy fundamentals. More...



1. Morgan Stanley (MS) - View IBD Stock Checkup
Composite Rating 99*. One of four investment bankers on this week’s list, the company has delivered revenue growth between 50% and 60% in the last four quarters. Trailing P-E: 12, Forward P-E: 11.

2. American Capital Strategies (ACAS) - View IBD Stock Checkup
Composite Rating 99. The $6 billion market-cap firm, tracked in the Finance-Investment Mgmt group, has a three-year EPS growth rate of 66%. It’s scheduled to report Q3 results on Oct. 31. Trailing P-E: 8, Forward P-E: 13.

3. Goldman Sachs (GS) - View IBD Stock Checkup
Composite Rating 99. Annual earnings at the $80 billion market-cap firm are expected to jump 57% in 2006 to $17.65 a share. Trailing P-E: 11, Forward P-E: 11.

4. Copa Holdings (CPA) - View IBD Stock Checkup
Composite Rating 99. The Panama-based airline is up 37% year-to-date compared to a 10% gain for the Transportation-Airline group. Trailing P-E: 15, Forward P-E: 13.

5. First Marblehead (FMD) - View IBD Stock Checkup
Composite Rating 99. Last week, the education finance company reversed a year-ago loss with profit of $2.23 a share. Revenue surged 761% to $301.8 million. Trailing P-E: 12, Forward P-E: 15.

6. Merrill Lynch (MER) - View IBD Stock Checkup
Composite Rating 98. Earlier this month, the New York-based investment bank handily beat estimates with a 43% rise in Q3 profit. Sales jumped 40% to $17.38 billion. Trailing P-E: 13, Forward P-E: 12.

7. Lehman Bros. (LEH) - View IBD Stock Checkup
Composite Rating 98. The company’s Fundamental Rating of 98 (A+) from Stock Checkup is fueled by a three-year EPS growth rate of 28% and a three-year sales growth rate of 38%. Trailing P-E: 12, Forward P-E: 11.

8. Cummins (CMI) - View IBD Stock Checkup
Composite Rating 98. Earlier this month, the maker of diesel engines signed an accord with China-based Foton Motor to make engines in China. Trailing P-E: 11, Forward P-E: 9.

9. Qiao Xing Universal Telephone (XING) - View IBD Stock Checkup
Composite Rating 98. Annual return on equity at the China-based maker of wireless handsets and accessories hit a multi-year high of 25% in 2005. Trailing P-E: 11, Forward P-E: 10.

10. Steel Dynamics (STLD) - View IBD Stock Checkup
Composite Rating 98. Earlier this month, the company reported a 131% surge in Q3 profit. Sales jumped 83% to $911.9 million. Trailing P-E: 9, Forward P-E: 8.