Markets

45 stocks have a P/E of under 10. These two are also up more than 60% in the past year.

Fri 26 May 23, 4:05pm (AEST)
Markets trading screen with stocks
Source: Shutterstock

Key Points

  • 45 stocks have a trailing P/E of under 10.
  • 2 stocks are up more than 50% in the past year while 2 are down more than 50% in the past year

Welcome to the first in our latest Data Deep Dive series. As markets have become more volatile in the past year, the flight to quality investments has become more important than ever. Defensive and “low risk” stocks now attract some of the top forward P/Es in the market, and many of them are extremely expensive. 

ASX 200 valuation premium of selected sectors relative to historical ranges April 2023
Source: L1 Capital

This presents a real quandary for investors. How can you justify moving your hard-earned cash into defensive stocks while recognising you will have to pay exorbitant valuations for them? 

That’s where this series comes in handy. The Market Index Low P/E stocks scan is designed to provide a rough guide on which stocks are “good value”.

Of course, P/E valuations are not (and should not be) the only thing you can use to value an investment. But a cheap stock does play a big role in identifying low-hanging opportunities if they pass other quality thresholds. 

And just as cheap stocks can present opportunities, they can also be serious value traps if the due diligence is not done correctly. If you need any proof of that, only 16 of the 45 stocks on the list are up in the past year.

As of Friday 26 May 2023, there are 45 ASX stocks that have a trailing P/E of below 10. 


Ticker

Company

Price

PE

Mkt Cap

1 Year

WDS

Woodside Energy Group

$34.89

8.18

$66.25 B

19.90%

RIO

Rio Tinto

$107.24

9.88

$39.81 B

-3.20%

S32

SOUTH32

$3.90

7.82

$17.74 B

-16.24%

PLS

Pilbara Minerals

$4.57

8.2

$13.69 B

62.46%

SPK

Spark New Zealand

$4.88

8.58

$9.07 B

12.44%

BSL

Bluescope Steel

$19.03

5.18

$8.73 B

4.59%

YAL

Yancoal Australia

$4.94

1.83

$6.52 B

-18.75%

IPL

Incitec Pivot

$3.05

7.81

$5.91 B

-16.58%

WHC

Whitehaven Coal

$6.29

1.76

$5.49 B

24.80%

VEA

Viva Energy

$3.22

9.73

$4.99 B

12.98%

JBH

JB Hi-Fi

$44.06

8.34

$4.82 B

-2.72%

ILU

Iluka Resources

$11.19

9.21

$4.77 B

7.00%

NHC

New Hope Corporation

$4.95

3.51

$4.37 B

30.95%

HVN

Harvey Norman Holdings

$3.49

5.84

$4.35 B

-19.03%

BKW

Brickworks

$25.62

6

$3.9 B

26.83%

BPT

Beach Energy

$1.42

6.52

$3.23 B

-10.44%

SGM

Sims

$14.20

6.37

$2.74 B

-19.12%

GNE

Genesis Energy

$2.55

9.44

$2.72 B

3.24%

SUL

Super Retail Group

$11.83

9.81

$2.67 B

28.25%

ZIM

Zimplats

$23.81

7.49

$2.56 B

-19.37%

PRU

Perseus Mining

$1.83

8.09

$2.5 B

-4.07%

SMR

Stanmore Resources

$2.61

3.11

$2.35 B

-1.88%

BFL

BSP Financial Group

$4.89

2.11

$2.28 B

-2.20%

CRN

Coronado Global Resources

$1.32

2.87

$2.21 B

-40.00%

VUK

Virgin Money

$2.89

8.56

$2.02 B

8.46%

SNZ

Summerset Group

$8.38

7.2

$1.95 B

-13.43%

APM

APM Human Services International

$2.01

6.61

$1.84 B

-37.96%

GNC

Graincorp

$7.72

5.19

$1.73 B

-20.00%

MFG

Magellan Financial Group

$7.84

6.75

$1.42 B

-45.78%

HLI

Helia Group

$3.27

6.69

$1.09 B

10.47%

HGH

Heartland Group Holdings

$1.46

9.48

$1.04 B

-26.63%

ELD

Elders

$6.54

8.49

$1.02 B

-51.12%


Commentary

Of the 45 stocks mentioned here, two are down more than 50% over the past year. 

Elders (ASX: ELD) has been the victim of softening livestock trading conditions, weaker crop prices and unseasonably wet weather. Earnings dropped 46% in the first half despite a bump in revenues. But management believes that the second half will be better than the first half, as supply chains ease and freight costs continue to fall. It could also be argued the stock is “deceptively” cheap given PEs in this list are trailing. The number will likely jump after the FY result in August.

ELD 1 year chart

 

In contrast, Grange Resources (ASX: GRR) is sitting at near-52-week lows. The company has been a victim of lower iron ore prices and high energy/operating costs. Much larger rival Rio Tinto (ASX: RIO) is only down 3% in the same time frame.

GRR 1-year chart

 

Having said this, there are two stocks that are also up more than 50% in the past year.

One of them is Pilbara Minerals (ASX: PLS). One of only two lithium producers on the ASX, the stock is up more than 60% in the last 12 months. Pilbara also attracts a BUY from the Market Index broker consensus with 13 sell-side analysts assigning the stock that rating. One of them is Morgan Stanley, which argues that lithium prices bottomed out at the beginning of this year.

PLS 1-yr chart

 

The other is Myer Holdings (ASX: MYR). The stock is up more than 65% despite the analyst consensus having no buys and SELL ratings across the board. Why is this? In short, Myer has done what many of the other retailers couldn’t do - double earnings and generate some serious cash flow in an environment when consumers are slowing their spending habits. 

MYR 1-yr chart

 

Written By

Hans Lee

Senior Editor

Hans is one of the Senior Editors at Livewire Markets and Market Index. He created Signal or Noise and leads the team's coverage of the global economy and fixed income markets.

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