While it’s true you can’t get something for nothing, what fun it is to get a bargain — to snag something with a lofty value for less than you might expect to pay. So with bargain hunting in mind, we looked at large-cap companies — $10 billion or more in capitalization — that cost less than $10 per share (and also met some basic financial criteria).
Of the 539 large-cap stocks trading on the New York Stock Exchange, Nasdaq and NYSE MKT, 15 were trading for less than $10 — and the majority of these were in the financial sector.
To determine which large-cap stocks in the 2013 group delivered the biggest bang for an investor’s buck, we first looked at price-to-earnings, forward P/E, return on equity, return on assets and dividend yield. If any financial indicator was negative, we knocked the company off the list. We then booted Sirius XM Radio (SIRI) and Lloyds Banking (LYG), which had P/Es of two to three times the group’s average.
That gives us 10 sub-$10 large-cap stocks that will give you some bang for your buck, ranked by the ratio of how many billions in market cap the current stock price leveraged:
First, a couple of interesting notes:
- The billion-dollar-bang-for-the-buck group for 2013 is overwhelmingly international. Only one U.S. company made the final cut, Regions Financial (RF). Note: Although Banco Santander appears twice, one is Spain-based (SAN) and the other is the division in Brazil (BSBR).
- If we hadn’t have made $10 the cutoff for stock price, General Electric (GE), Microsoft (MSFT) and Pfizer (PFE) would have been on the list purely in terms of their ratios and positive financial indicators.
There are numerous different ways to determine the “best” from this group. Dividend investors, for instance, would probably only concentrate on the six large-cap stocks that paid dividends. Purely looking at the ratios also provided a good guide, but it gave me two Santanders.
It seemed fair to consider all the data gathered and rank it on a 1-10 scale, with 1 the best. The large-cap stocks with the lowest total scores therefore would be on the “best” list.
This is how the final list shook out: