These are tough times for investors who look for cheap companies. The Dow and S&P 500 jump from high to high but this boom is credit driven; it's the result of the monetary easing policy of the major Federal Reserve Banks in the world.
The good thing is that we can buy stocks in every market situation, whether the market has a P/E level of 30 or 10. What we need to is to look at solid growth for the single stock and not to overpay the future prospects of an asset.
When I look at the market today, I see that the financial sector, conglomerates and basic material stocks are the cheapest valuated ones in terms of forward P/E but the highest growth is predicted for the Services and Technology sector, both have the highest P/E ratios.
Tech stocks have made many people rich but if you remember times back to the dot.com bubble in 2000, many investors and private dealers lost their money because they believed that their super high-fly stock could change the world.
Facebook, Twitter and Google dominating our world today, but will they do it in 10 or 20 years too? For sure, Microsoft has survived over 40 years. Oracle, IBM and Apple developed also into dominant players and have created a long-term track record but technology is a fast changing business. You can make billions in a year but also lose all your money in the next half decade.
I own some of the old school technology stocks too but I don't like to pay for the uncertain future of the company more than it makes sense in an economic view. I will not pay 500 times of sales today because of the company's next revolutionary product from which I don’t know how it works.
I want dividends and a fair chance to make an 8 percent or more return, nothing else. The market has enough opportunities to realize this aim and it is easy to succeed.
I've found a new screener on Morningstar but he seems only to work with Canadian and US Stocks. Morningstar has a great classification of the company, from financial healthy to growth, so I tested it.
Today, I was looking for fairly valuated growth stocks with a good dividend yield. In addition, 5-Year expected earnings growth should be over 8 percent.
The screen delivered 25 results and my focus is still on consumer stocks, also non-cyclical dividend payer.
Below are 5 of my favorite picks. Do you like some of them? Please let me know what you think from the screen.