If you invest in the stock market, the best time to buy is when stocks are low. The age old question is will stocks go down further or will the best ones rally and begin their long climb back to normal. If you examine times when people became wealthy, it was during the times when few were buying and they could buy assets for less or at a bargain or at a discount. The best assets rise in value, the question is how do you know which is the best ones? In an article titled Fishing for bargains in troubled times by David Milstead offers methods to ensure the stocks you pick are the best of the worse.

One metric he uses is the number of stocks whose dividend yield begins to outstrip 10 year government notes as the market falls. (note when dividend stocks prices decline, their yield goes up). Mr. Milstead says on Tuesday Dec 29 the 10 year treasury was yielding 2.32% there were 210 stocks which had greater yields. By Thursday the yield fell to 2.15 and more than 257 stocks were greater.

Another metric to look at is enterprise value or market capitalization plus net debt divided by EBITDA (earnings before interest, taxes, depreciation, and amortization). In the S&P 500 the cheapest 20% is less than 7.5.

Mr. Milstead notes sometimes there are reasons why a company stock is low in value for seemingly good reasons which vary from management execution to competition to business models to their profits being tied to one very specific segment of the marketplace.  Having said that below is the list of 10 cheap stocks to consider:

Company            Ticker       Dividend  EV/                 PE         % Return

Yield %     EBIDTA                     Since 12/29

CF Industries    CF-N          3.51             5.9                9.1          -20.7

Ensco PLC          ESV-N        4.61            5.1                5.1            -16.4

GM                      GM-N           4.8             5.1                5.7            -14.4

NetApp              NTAP-Q       3.08           3.3               9.5             -13.8

The Mosaic       MOS-N         4.31            5.9              10.5           -13.7

Transocean       RIG-N          5.45           5.7                9.5            -13.5

Magna                  MG-T          2.49          4.2               7.7             -13.0

Lincoln National LNC-N     2.20           3.4              7.3              -13.0

Principal Finan     PFG-N     3.78          7.4              9.9               -12.8

Seagate Tech        STX-Q      7.30           6.7              9.9                -12.4

Linking to dividend paying stocks, all the above pay a dividend which gives many choices which is good. In the world of investing, buying good quality companies at low prices and waiting for the market to go back to what is normal allows you to earn a healthy capital gain with little risk and be paid a dividend while you wait. There are many alternatives pick yours and be on easy street.

There are more questions than answers, till the next time – to raising questions.