How will this decile of low P/E stocks perform?

Many research has been done on how low P/E stocks consistently outperform the market over the long run.

For instance, Roger Ibbotson, in his Decile Portfolios of the New York Stock Exchange, 1967 - 1984 Working paper, sorted all stocks according to the Price/Earnings ratios into deciles. He then tracked the returns of each decile over an 18-year period.

What he found out was that the lowest P/E decile returned 14.08% on average annually as compared to the NYSE which returned 8.6%. The highest P/E decile returned 5.58% instead.

Coming up with the lowest decile of P/E stocks in the STI

I worked with the free stock screener by SGXcafe. Frankly, for something which cost zero, the functionalities are very good. All I did was to put in two variables: P/E > 0, and last close > 0. This is to remove companies with negative earnings and non-traded companies (stock price = 0).

It churned out a list of 308 stocks, and then I sorted them into deciles, using Excel. This gave me a list of 30 stocks with the lowest P/E ratios, with a maximum P/E of 4.5.


Name
Symbol
P/E
L.Close
BQO
0.4
0.27
B07
0.81
0.003
BRD
0.91
0.29
BEV
1.72
0.61
AFC
1.82
0.16
T4B
1.92
0.345
5ET
2.22
0.006
545
2.39
0.017
I5H
2.64
0.023
5TT
2.66
0.47
C04
2.67
0.082
L03
2.71
0.45
BLU
2.76
0.25
42Z
2.84
0.055
5UA
3.04
0.255
5OR
3.31
0.041
AWX
3.31
0.63
42W
3.46
0.25
AZA
3.6
0.545
RC5
3.66
0.28
BFU
3.78
0.31
5TR
3.78
0.182
H30
3.93
0.615
ER0
3.97
0.545
5IF
4.19
0.065
547
4.23
0.4
C76
4.39
0.945
T42
4.4
0.16
41F
4.41
0.079
D2U
4.44
0.004

Forward testing the results

This data has been taken on 25 November, and I will revisit again in March 2017. Let's see what the future entails!
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