Dividends4Life: These Dividend Stocks Are Undervalued

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These Dividend Stocks Are Undervalued

Posted by D4L | Wednesday, May 22, 2013 | | 0 comments »

One quantitative screen, which investors can run to identify potential undervalued stocks is to look for low PEG ratios, a metric which is calculated by combining the P/E multiple and the consensus earnings growth rate. Analysts aren't always correct, of course, so it's important to combine looking at the PEG ratio with additional analysis. We decided to also screen stocks which are "cheap" by this measure for their dividend yield in order to potentially identify interesting names, which investors can research further. Using data from Fidelity, here are five stocks with a market capitalization of $1 billion or more, PEG ratios of 0.9 or lower, and dividend yields of 3% or higher:

The combination of "undervalued" and high yield often produces some interesting results, and the first stock on our list is Russian TV company CTC Media (CTCM). Newmont Mining (NEM), a $16 billion market cap gold miner, also satisfies our criteria with a fairly low PEG ratio and with a recent increase in its quarterly dividend payment. Cash transfer services company Western Union (WU) has a PEG ratio of 0.9 per Fidelity. Another stock that manages to pay a decent yield and attract analyst optimism is contract offshore driller Ensco (ESV). Rounding out our list is $1.9 billion market cap biotechnology company Questcor Pharmaceuticals (QCOR).

Source: Seeking Alpha

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