Enterprising Investor Forum

We know that this could be a controversial screen with some of our readers but we still think that it is an interesting way to get some additional names for your short-list to analyze in more detail… at the end of the day, it’s all about trying to find new ideas!

We used the Microsoft Deluxe Screener to pull up all the stocks that have a current P/E Ratio that is lower than the current Dividend Yield. Then we also used the S&P Index Membership filter (as our reader poll was definitely of the idea that the S&P will outperform!) and this is what came up:

• United States Steel Corp (X)
• Freeport McMoRan (FCX)
• Constellation Energy (CEG)
• Windstream Corp (WIN)
• Embarq Corp (EQ)
• Century Tel Inc (CTL)

However, under the current economic circumstances and negative outlook, we need to make sure that our short-list will be able to withstand the storm and therefore, we added the following filters:

• Current Ratio equal to or over 1: in order to ensure the immediate financial health and ability to meet current obligations
• Debt to Equity Ratio equal or under 1: in order to measure leverage and ensure a not too aggressive financing of growth through debt
• MSN Stock rating on over 7: just as an additional check

And we are left with:

1. United States Steel Corp (X)
2. Freeport McMoRan (FCX)
3. Constellation Energy (CEG)

Hmmm, all Energy/Commodity stocks? Not surprising following the recent sell-off in the sector but what about the future? Will the world stop growing? Will developing countries stop developing? Maybe, there might be an interesting opportunity here for the long-term Enterprising Investor ….

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