As investors know, it can be very difficult finding the right stock at the right price when we are ready to buy. To make things easier for you, I have scoured the market and found three stocks that are trading at inexpensive forward valuations compared with their five-year averages, so let’s take a closer look to determine which would be the best fit for your portfolio.
1. SNC-Lavalin Group Inc.
SNC-Lavalin Group Inc. (TSX:SNC) is one of the world’s largest engineering and construction companies. At today’s levels, its stock trades at 17 times fiscal 2015’s estimated earnings per share of $2.34 and 16.2 times fiscal 2016’s estimated earnings per share of $2.45, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 43.7. In addition, the company pays a quarterly dividend of $0.25 per share, or $1.00 per share annually, giving its stock a 2.5% yield.
2. RONA Inc.
RONA Inc. (TSX:RON) is one of Canada’s largest retailers of home improvement products. At current levels, its stock trades at 15.7 times fiscal 2015’s estimated earnings per share of $0.95 and 13.8 times fiscal 2016’s estimated earnings per share of $1.08, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 23.4. Also, the company pays a quarterly dividend of $0.04 per share, or $0.16 per share annually, which gives its stock a 1.1% yield.
3. Open Text Corporation
Open Text Corporation (TSX:OTC)(NASDAQ: OTEX) is one of the world’s largest providers of enterprise information management (EIM). At today’s levels, its stock trades at 17.1 times fiscal 2016’s estimated earnings per share of US$3.50 and 16.3 times fiscal 2017’s estimated earnings per share of US$3.68, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 29.4. Additionally, the company pays a quarterly of US$0.20 per share, or US$0.80 per share annually, giving its stock a 1.7% yield.
Which of these stocks would be the best fit for your portfolio?
SNC-Lavalin Group, RONA, and Open Text are three of the top value play in their respective industries. Foolish investors should strongly consider initiating long-term positions in at least one of them today.
