S&P 500   3,911.74
DOW   31,500.68
QQQ   294.61
S&P 500   3,911.74
DOW   31,500.68
QQQ   294.61
S&P 500   3,911.74
DOW   31,500.68
QQQ   294.61
S&P 500   3,911.74
DOW   31,500.68
QQQ   294.61

3 Attractive Stocks with P/E Ratios Under 10

Wednesday, March 9, 2022 | MarketBeat Staff
3 Attractive Stocks with P/E Ratios Under 10

U.S. stocks are on track to close lower for the third straight month. It would be the first time this has happened since the pandemic plunge of early 2020. 

With no end in sight to the Russian attack on Ukraine, equity markets in other parts of the world are also on edge. The energy sector aside, stock prices continue to slide amid high geopolitical uncertainty and exploding commodity prices.

This means that price-to-earnings, or P/E, ratios have also come down for most companies. Around 22x prior to the start of the Russia-Ukraine crisis, the forward P/E on the S&P 500 has dropped to 19x, the first sub-20x reading since the early Covid days.

It is a risky market to be buying into, but the reality is domestic stocks haven’t flashed such valuations in a long time. High multiple names could remain targets for further compression leaving stocks with low P/E’s relatively unscathed. 

It is within the low P/E group that investors will find some companies with limited downside and bargain valuations. These three stocks have P/E ratios under 10 and favorable risk-reward profiles.

What is a Good Steel Stock? 

Reliance Steel & Aluminum Co. (NYSE: RS) is trading at 8x this year’s earnings estimate. The metals producer climbed to a record $194.91 last week on soaring prices for carbon and stainless steel, which together account for approximately three-fourths of revenue. The $15 pullback since has presented a more ideal entry point for a stock that should continue to trend higher in a year already dominated by rising commodities.

As North America’s largest metals services center, Reliance provides more than 100,000 metal products along with processing services to a wide range of customers. Its biggest market, the commercial construction industry, is experiencing increased bidding activity and expected to be a strong source of demand. Customers in the auto, aerospace, and energy markets are also showing solid demand with these industries well into recovery mode.

Reliance’s diverse customer base combined with higher pricing drove a 60% jump in sales last year. And with steel rebar prices already up 12% year-to-date and U.S. infrastructure projects progressing, things are looking up for 2022. The (steel) bar will be set high after a stellar 2021 performance, but the current valuation makes Reliance a steal. 

Is Builders FirstSource Stock a Buy?

Builders FirstSource, Inc. (NYSE: BLDR) is an undervalued construction play of a different sort. It too has come down from a recent record high to the tune of 20%. At less than 8x forward earnings, the country’s leading building materials supplier may be the cheapest way to invest in the U.S. homebuilding and remodeling boom.

With over 550 locations across 39 states, Builders FirstSource is a one-stop shop for homebuilders, sub-contractors, and do-it-yourselfers. Its offerings run the residential construction gamut from floors to roofs to walls to windows. 

Among the biggest trends to come out of the pandemic is increased interest in home remodeling and renovations. A seller's market and near record low mortgage rates are incentivizing other homeowners to build. These trends have been a powerful two-pronged demand engine for Builders FirstSource’s products and services. 

The company is coming off a banner year in which sales rose 56% to a record $19.9 billion. Expectations for a healthy housing market in 2022 has management predicting another strong year. 

Although Builders FirstSource won’t continue to produce the type of growth it did in 2021, projections for 10% annual sales growth through 2025 would keep the business humming along well above anticipated U.S. GDP growth. A healthy housing market, solid balance sheet, and focus on digital innovation make this a company worth building into a long-term growth portfolio. 

Is Whirlpool Stock Undervalued?

Few manufacturers have been challenged by the current economic headwinds as much as Whirlpool Corp. (NYSE: WHR). The home appliances maker continues to face the one-two punch of supply chain disruptions and rising raw material costs. While things like higher freight and steel costs have weighed on margins, the good news is that underlying sales trends are positive.

After recording a 13% jump in revenue last year, consumer demand for washers, dryers, refrigerators, and other household appliances is expected to grow in 2022. And with roughly half of sales generated outside the U.S., Whirlpool has good regional diversification to go along with its diversified brand lineup, which includes KitchenAid, Maytag, and Consul. 

Despite the overhang of supply chain woes and cost inflation, Whirlpool has been able to top consensus earnings estimates for 14 consecutive quarters. This speaks to management’s ability to manage costs and effectively implement price increases to capitalize on a healthy demand backdrop.

With logistics nightmares expected to ease as the year progresses, management struck a rather dreamy tone in its 2022 outlook. Although high steel prices are expected to dent profitability by at least $1 billion, the company expects price hikes and a more favorable product mix to drive a 6% increase in the operating margin. 

EPS are forecast to be $27 to $29. At the midpoint, this implies a forward P/E of just 7x. At this valuation, investors should buy, rinse, and repeat.

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Builders FirstSource (BLDR)
2.4633 of 5 stars
$52.80+3.3%N/A6.20Moderate Buy$93.17
Reliance Steel & Aluminum (RS)
3.124 of 5 stars
$172.79+5.7%2.03%6.60Moderate Buy$216.00
Whirlpool (WHR)
2.9881 of 5 stars
Compare These Stocks  Add These Stocks to My Watchlist 

Should you invest $1,000 in Builders FirstSource right now?

Before you consider Builders FirstSource, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Builders FirstSource wasn't on the list.

While Builders FirstSource currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The 5 Stocks Here

Free Email Newsletter

Complete the form below to receive the latest headlines and analysts' recommendations for your stocks with our free daily email newsletter:

Most Read This Week

Recent Articles

Search Headlines:

Latest PodcastHow To Navigate The Market Downturn Like A Pro

In this episode, Kate sits down with Kyrill Astur, CEO of portfolio management firm Centerfin. Kyrill brings a background from Wall Street and hedge funds to his current role helping individual investors navigate the market challenges while investing for their future.

MarketBeat Resources

Premium Research Tools

MarketBeat All Access subscribers can access stock screeners, the Idea Engine, data export tools, research reports, and other premium tools.

Discover All Access

Market Data and Calendars

Looking for new stock ideas? Want to see which stocks are moving? View our full suite of financial calendars and market data tables, all for free.

View Market Data

Investing Education and Resources

Receive a free world-class investing education from MarketBeat. Learn about financial terms, types of investments, trading strategies and more.

Financial Terms
Details Here
MarketBeat - Stock Market News and Research Tools logo

MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings, economic reports, financials, insider trades, IPOs, SEC filings or stock splits, MarketBeat has the objective information you need to analyze any stock. Learn more about MarketBeat.

MarketBeat is accredited by the Better Business Bureau MarketBeat is rated as Great on TrustPilot

© American Consumer News, LLC dba MarketBeat® 2010-2022. All rights reserved.
326 E 8th St #105, Sioux Falls, SD 57103 | U.S. Based Support Team at [email protected] | (844) 978-6257
MarketBeat does not provide personalized financial advice and does not issue recommendations or offers to buy stock or sell any security.

Our Accessibility Statement | Terms of Service | Do Not Sell My Information | RSS Feeds

© 2022 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer.