Barron's Says Take A Seriouis Look At These Low P/E Stocks (TEX, LEH, AIG, GT, MRO, GCI)

In this week's Barron's, it had an interesting piece on looking at cheap, low P/E stocks. Barron's talked to noted value manager Leon Cooperman of Omega Advisors, who said he now feels like a "kid in a candy store."

Barron's learned that the 100-plus S&P stock with single digit P/Es are dominated by two sectors: energy and financials. Barron's narrowed the list to 10 stocks. Barron's does recognize that some of these stocks still have much trouble to overcome, but if investors are patient, then summer of '08 may be the best summer sale yet!

The stocks include: XL Capital (NYSE: XL), Lehman Brothers (NYSE: LEH), AIG (NYSE: AIG), Marathon Oil (NYSE: MRO), Gannett (NYSE: GCI), ConocoPhillips (NYSE: COP), Hartford Financial (NYSE: HIG), Goodyear Tire (NYSE: GT), Valero (NYSE: VLO) and Terex (NYSE: TEX)

All the major U.S. energy companies -- Chevron (NYSE: CVX) ExxonMobil (NYSE: XOM) and ConocoPhillips -- trade for less than 8 times projected '09 net, and Conoco trades at the cheapest multiple. Conoco trades at 6 times projected 2008 profits of $13.03 a share and 5.8 times estimated '09 net of $14.13 a share.

Gannett shares have fallen this year by 54%, after a 35% decline in 2007, is very cheap and one the most hated stocks in the newspaper sector. A lot of bad news is already priced into Gannett's shares as it trades for less than 6 times projected 2009 profits. Barron's said an investment in Gannett is highly contrarian one, but investors will reap a 9% dividend yield that is well-covered by earnings.

XL trades at three times estimated '09 profits and half of book value. Investors are fearful the company may have to pump billions of dollars into Security Capital Assurance (NYSE: SCA), a troubled, MBIA-like financial-guaranty company. SCA was spun off by XL in 2006.

Goodyear Tire, suffering from the weak U.S. auto market, is down 28% this year. Goodyear trades for 7 times projected 2009 profits.

Despite beating numbers and raising guidance, Terex cannot get a break from investors. Terex trades for 7 times this year's earnings, making it one of the cheapest industrial stocks in the market.

ConocoPhillips, Valero, Goodyear Tire and Gannett are among those companies with cheap P/Es that could rise over the next 18 months. Barron's thinks these low P/Es is a great place to find stocks that will shine in 2009.

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