At present, the A-share market is generally in a relatively sluggish state, and many stocks have low valuations. Some stocks even have less than 5 times the price-to-earnings ratio of to as of today! Look at the figure below
Although these stocks have price-to-earnings ratios of less than 5 times, they must be filtered in combination with fundamentals . Not all stocks with low price ratio are worth investing in.
For example, Jiuan Medical 's current price-to-earnings ratio is only 1.66 times, which seems to be very cheap. But we have to consider that it is a sudden outbreak of performance benefiting from the epidemic, and it will be difficult to sustain such performance in the future. Therefore, although it is low in valuation, it is not within the range of our stock selection .
What we need to pay attention to are stocks of companies whose price-to-earnings ratio is not only low but also stable performance and future trends, rather than those stocks with low valuation caused by special reasons or just at the peak of the industry.
According to this investment idea, when we select stocks, we will find that the stocks of biopharmaceuticals and coal companies in the chart above do not meet the standards. Biopharmaceutical companies have good performance and low price-to-earnings ratios due to the epidemic in recent years, which is impossible to sustain long-term performance. Coal companies benefited from the sharp rise in coal prices this year, and it is impossible for them to maintain performance in the long run. Since steel companies are in a strong cyclical industry, they are generally not suitable for evaluating with price-to-earnings ratio. Zhongyuanhai Control benefited from the most recent maritime peak, which is an extraordinary performance and cannot be selected by price-to-earnings ratio.
When we remove these types of companies, we find that there are basically only stocks in the banking sector, and there are also a small number of infrastructure sectors. They are 18 bank stocks including China Bank , Guiyang Bank , Everbright Bank , Shanghai Bank , Bank of Communications, Beijing Bank , and other 18 bank stocks, as well as China Railway Construction and China Communications Construction . Total of 20 stocks.
These 20 stocks are likely to be truly undervalued stocks. The reasons are as follows:
1 Compared with Bank of America , the valuation of Chinese bank stocks is very low
Bank of America stocks is generally more than 10 times, and my country is also the world's largest bank ICBC price-to-earnings ratio is only 4.2 times! Why is this happening? The reasons here are many aspects, including the reasons for my country's banking industry itself and the reasons for the market's deviation in its positioning of my country's banking industry.
2 my country's banking industry has good fundamentals
In recent years, my country's banking industry has made the banking industry on track after a series of reforms. The development of the banking industry is relatively healthy, and risk control is also more effective.
3 The external environment of the banking industry is getting better and better
The country's continuous reserve requirement ratio cuts, the stock market's financing , and the improvement of the economic environment have laid a solid foundation for the development of the banking industry.
4 my country's infrastructure environment warms up in the second half of this year
China Railway Construction and China Construction are two leading companies in China, and they are also famous large companies in the world. With the future economic improvement, their performance is likely to rise.
If the valuation of these companies can reach an 8-fold price-to-earnings ratio in the future, the stock price of these stocks will double. Investors who invest in stocks of these companies will receive generous investment returns. As long as these companies streamline the internal operating system, maintain good performance, pay attention to communication with investors, and coupled with the benefits of mergers and restructuring, it is still very likely that the market will launch a wave of low-valuation stocks in the future to return to the bull market market.
Even if there is no large market for bank stocks or Chinese stocks in the future, the risk of holding these low-price-earnings stocks is relatively small. In addition, these companies have generous dividends and a higher dividend yield. Investors can obtain good investment returns based on dividends alone.Taking Industrial and Commercial Bank of China as an example, its current dividend yield has reached more than 7%!
Statement: Any views published in this article represent the author’s personal information and do not constitute investment advice. Entering the market based on this is at your own risk.
