As many investors have come to know, finding the right stock at the right price is a very difficult task. To make things easier, I have compiled a list of three stocks that are trading at inexpensive forward valuations, so let’s take a closer look at each to determine which one would fit best in your portfolio.
1. Progressive Waste Solutions Ltd.
Progressive Waste Solutions Ltd. (TSX:BIN)(NYSE:BIN) is one of the largest providers of waste management services in North America. At today’s levels its stock trades at just 26.4 times fiscal 2015’s estimated earnings per share of $1.29 and only 22.8 times fiscal 2016’s estimated earnings per share of $1.49, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 29.1.
In addition, Progressive pays a quarterly dividend of $0.16 per share, or $0.64 per share annually, giving its stock a 1.9% yield at current levels. The company has also increased its dividend for three consecutive years, and its consistent free cash flow generation could allow this streak to continue in 2015.
2. Russel Metals Inc.
Russel Metals Inc. (TSX:RUS) is one of the largest metals distribution companies in North America. At current levels its stock trades at just 16.9 times fiscal 2015’s estimated earnings per share of $1.40 and only 13.4 times fiscal 2016’s estimated earnings per share of $1.77, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 21.9.
Additionally, Russel pays a quarterly dividend of $0.38 per share, or $1.52 per share annually, which gives its stock a 6.4% yield at today’s levels. It is also important to note that the company has increased its annual dividend payment for four consecutive years, and its consistent free cash flow generation could allow this streak to continue for another four years at least.
3. Acadian Timber Corp.
Acadian Timber Corp. (TSX:ADN) is the second-largest timberland operator in New Brunswick and Maine. At today’s levels its stock trades at 18.9 times fiscal 2015’s estimated earnings per share of $0.99 and only 17.8 times fiscal 2016’s estimated earnings per share of $1.05, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 26.5.
In addition, Acadian pays a quarterly dividend of $0.225 per share, or $0.90 per share annually, giving its stock a 4.8% yield at current levels. Investors should also note that the company increased its dividend by 9.1% in March as a result of a “comfortable level of surplus cash,” and I think this could become an ongoing theme over the next several years.
Should you buy one of these stocks today?
Progressive Waste Solutions, Russel Metals, and Acadian Timber are three of the top value plays in the market today. Foolish investors should take a closer look and strongly consider establishing long-term positions in at least one of them.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Joseph Solitro has no position in any stocks mentioned.