Published Fri, 01 Feb 2013 09:09:35 -0500 on Seeking Alpha
Research has shown that stocks with low price-to-book-value have less downside risk than the average stock and tend to outperform the overall market average as well. I have searched for very profitable companies with very low price-to-book-value that pay rich dividends. Those stocks would have to show a very low price to free cash flow and a very low P/E. I have elaborated a screening method, which shows stock candidates following these lines. Nonetheless, the screening method should only serve as a basis for further research. The screen's formula requires all stocks comply with all the following demands:
Dividend yield is greater than 4.0%.
The payout ratio is less than 60%.
Price to free cash flow is less than 10, (many investors prefer using free cash flow instead of net income to measure a company's financial performance, because free cash flow is more difficult... Read more