On the first Tuesday (sorry, day late this month!) of every month, we will screen our database for the 10 companies with the lowest price to earnings ratio (ModernGraham-style) that are suitable for the enterprising investor.Â These 10 companies will be placed in a mock portfolio and rebalanced to have a 10% allocation to each company.Â The starting value of the portfolio is $100,000.00.Â Dividends will be reinvested in the portfolio.
To see the mock portfolio, you can view this google spreadsheet.
This month, the screen resulted in the following companies being targeted:
- EVEP â€“ EV Energy Partners (PE of 6.04)
- TDW â€“ Tidewater Inc (7.37)
- ATI â€“ Allegheny Technologies Inc (8.66)
- CB â€“ Chubb Corp (9.25)
- ISH â€“ International Shipholding Corp (9.49)
- UNH â€“ UnitedHealth Group (9.99)
- BHI â€“ Baker Hughes Inc (10.19)
- GRMN â€“ Garmin Limited (10.45)
- PMD â€“ Psychemedics Corp (10.60)
- XRX â€“ Xerox Corp (10.69)
The major changes in the portfolio were the dropping of American Electric Power Co (AEP), Merck & Co (MRK), Olin Corp (OLN), and General Dynamics (GD) and the additions of EVEP, TDW, ATI, and XRX.Â Allegheny (ATI) is new to the valuation database and the other three additions simply had lower PEs than those they replaced.
The following mock transactions were made this month:
- Received $0.41/share dividend on 332 shares of AEP for $136.12 (prior to sale)
- Received $0.20/share dividend on 657 shares of OLN for $131.40 (prior to sale)
- Received $0.50/share dividend on 303 shares of ISH for $151.50
- Received $0.75/share dividend on 331 shares of GRMN for $248.25
- Sold 332 shares of AEP for $10,687.08, profit of 3.9%.
- Sold 324 shares of MRK for $11,732.04, profit of 14.6%.
- Sold 657 shares of OLN for $11,017.89, profit of 1.3%.
- Sold 160 shares of GD for $10,544.00, profit of 16.5%.
- Sold 13 shares of UNH for $372.71, profit of 14.50%.
- Sold 111 shares of PMD for $682.65, profit of 0.8%.
- Bought 20 shares of ISH for $664.20.
- Bought 7 shares of CB for $350.98.
- Bought 25 shares of BHI for $1,018.50.
- Bought 28 shares of GRMN for $836.64.
- Bought 415 shares of EVEP for $10,727.75.
- Bought 238 shares of TDW for $10,693.34.
- Bought 314 shares of ATI for $10,685.42.
- Bought 1392 shares of XRX for $10,718.40.
Here is the portfolio in comparison to the DJIA and the S&P 500:
|Low PE Portfolio||DJIA||S&P 500|
|Since Inception (9/30/09)||7.18%||6.51%||3.65%|
|Quarter To Date||7.18%||6.51%||3.65%|
Full Disclosure:Â At the time of publication, the author held a position in GRMN and TDW.
Photo provided by herval.