Cheap ASX stocks with P/Es less than 10: Which will grow earnings in FY24?
There are 31 ASX 300 stocks trading at single digit PEs. But only a handful can grow their earnings.
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Mentioned
KEY POINTS
- There are 31 ASX 300 stocks with low PEs, mostly from the Materials, Energy and Financials sector
- The average low PE stock is down 19.8% in the past twelve months
- Only 10 stocks from the list are forecast to grow earnings in FY24
The low price-to-earnings scan locates ASX 300 stocks with P/Es of less than 10 and identifies those that can grow earnings in FY24.
There are currently 31 ASX 300 stocks with trailing P/Es of less than 10.
The most common sectors are Materials (11), Energy (7) and Financials (4)
The average 1-year performance is -19.8%
The median 1-year performance is -21.2%
The average consensus price target is 21.7% above current levels
The Cheapest ASX Stocks
The below data is sorted from lowest to highest P/E.
Ticker | Company | Close Price | PE | 1-Year |
|---|---|---|---|---|
Terracom | $0.37 | 1.22 | -63.50% | |
Whitehaven Coal | $7.94 | 2.71 | -15.08% | |
Seven West Media | $0.28 | 2.93 | -37.50% | |
Stanmore Resources | $4.07 | 3.17 | 19.01% | |
Karoon Energy | $1.86 | 4.27 | -19.03% | |
Pilbara Minerals | $3.33 | 4.4 | -31.06% | |
New Hope Corp | $5.24 | 4.47 | -21.20% | |
Grange Resources | $0.43 | 4.48 | -58.25% | |
Helia Group | $4.69 | 5.11 | 69.93% | |
Solvar | $1.12 | 5.3 | -44.00% | |
Qantas Airways | $5.33 | 5.61 | -18.75% | |
Perseus Mining | $1.80 | 5.66 | -22.63% | |
Woodside Energy | $31.14 | 5.88 | -17.31% | |
Iluka Resources | $6.49 | 6.45 | -38.43% | |
APM Human Services | $0.74 | 6.53 | -70.75% | |
West African Resources | $0.94 | 6.74 | -27.41% | |
GrainCorp | $7.64 | 6.75 | 0.00% | |
Perenti | $0.87 | 6.81 | -33.72% | |
Resolute Mining | $0.40 | 7.58 | 40.35% | |
Adairs Limited | $1.64 | 7.59 | -40.76% | |
Coronado Global Resources | $1.63 | 7.79 | -23.83% | |
Rural Funds | $2.05 | 8.16 | -15.29% | |
National Storage REIT | $2.20 | 8.48 | -4.35% | |
Spark New Zealand | $4.90 | 8.66 | 0.62% | |
Platinum Asset Management | $1.20 | 8.8 | -43.10% | |
Beach Energy | $1.55 | 8.91 | -3.73% | |
Magellan Financial Group | $8.99 | 8.99 | -3.23% | |
Santos | $7.66 | 9.59 | 4.08% | |
SSR Mining Inc | $14.88 | 9.63 | -39.51% | |
Harvey Norman | $4.39 | 9.95 | -2.23% | |
IGO | $7.02 | 9.96 | -53.69% |
Target price' is an aggregate of Refinitiv broker target prices. Data as at Tuesday, 23 January 2024.
The Biggest Upside
APM Human Services is a global health and workplace services provider with operations across Australia, Europe, North America and Asia. It's a stock that's loved by brokers but is down 40% in the past month and down 71% in the past year.
APM provided a first-half FY24 last week which flagged a number of headwinds:
Sustained and historic low levels of unemployment is leading to reduced client flows into employment services programs
This leads to lower volumes of placements, especially in Australia and the UK
Recruitment market for allied health professionals remains tight
Higher interest rate costs and taxes
The company expects to deliver $1.14 billion in revenue in the first half of FY24, up 33.5% year-on-year as well as $148 million in EBITDA, down 11% compared to last year.
"In our view, whilst APM is a high quality and best in breed operator, the ongoing challenging operation environment, worsening revenue quality and implied operating deleverage create material headwinds," UBS analysts said in a note last week.
Like most brokers, UBS acknowledged the short-to-medium headwinds and downgraded the stock to NEUTRAL (from Buy) and cut its target price to $1.27 (from $3.00). This still reflects upside of 73.9% compared to current levels.
Earnings Growth
Trailing P/Es for many bargain-priced stocks are likely to rise as earnings fall in the upcoming reporting season. For example, Pilbara Minerals reported a 65% drop in first-half FY24 revenue on Wednesday. What will happen to the P/E ratio when its earnings have more than halved?
Fortunately, there are 10 companies from the above list that are forecast to grow earnings in FY24.
Karoon Energy
National Storage REIT
Qantas
Resolute Mining
Seven West Media
Spark New Zealand
SSR Mining
Stanmore Resources
West African Resources
But each company comes with its own baggage (Qantas and its pun included). A few that come to mind include: Karoon Energy recently downgraded its production guidance due to mechanical issues at its SPS88 well. Resolute Mining and West African Resources are Africa-based gold miners that tend to trade at a substantial discount to peers.
