Deal or No Deal: 6 Undervalued Stocks Under 10 Dollars from Abroad

James Dennin, Kapitall: We decided to look for foreign stocks under 10 dollars that also have low price to equity and price to book ratios.

There are a couple of reasons to think that foreign markets might do better than American markets this year. For one, there was the record breaking run of the S&P 500 in 2013, which leaves most investors skeptical that US stocks will repeat the performance.

[Read more from Kapitall: Mergers and Acquisitions: Do Stocks Miss Out if They Miss Davos?]

So far this year, improving economic conditions and spending have failed to boost the stock market. The explanation, depending on who you ask, is that most investors are too wary to add a position before earnings come out this month.

Yet most stocks have performed pretty well in 2014 so far: about 70% of the companies who have released their numbers beat estimates. Usually a positive earnings surprise boosts the price of a stock, sometimes considerably. However the S&P is still down for the year, although only by a smidgeon, and 2014 is only about three weeks old. 

Investing ideas

Given the stock market's lukewarm performance so far this year, investors might want to consider diversifying their portfolios across foreign equities, in case some of those markets fare better. The UK, Germany, and Japan have all released positive outlooks going into 2014, and Japan is one of the few countries in the world that was able to keep pace with the US market last year. 

So we built a list of foreign stocks that trade on US exchanges that seem greatly undervalued using three of the most popular valuation metrics: price to equity (P/E) below 15, forward price to equity (forward P/E) below 15, and price to book (P/B) below 1.

All of these screens look at the ratio between the market price, and approximations of the price of equity held by shareholders. When this ratio is low, it either indicates that the company is losing value, or is being sold at a bargain because growth investors got it wrong.

After limiting our results to stocks under $10, just six foreign stocks on US exchanges remained on our list. 

​Click on the interactive chart below to view analyst ratings for these stocks over time.

1. AEGON N.V. ( AEG): Provides life insurance, pensions, and asset management products and services worldwide. Market cap at $19.12B, most recent closing price at $9.07.

P/E: 13.95

Forward P/E: 9.5

P/B: 0.51

 

2. Concord Medical Services Holdings Limited ( CCM): Operates a network of radiotherapy and diagnostic imaging centers in the People's Republic of China. Market cap at $265.58M, most recent closing price at $5.88.

P/E: 7.54

Forward P/E: 13.21

P/B: 0.26

 

3. ChinaEdu Corporation ( CEDU): Provides educational services to the online degree programs of universities in the People's Republic of China. Market cap at $58.11, most recent closing price at $6.97.

P/E: 5.62

Forward P/E: 11.06

P/B: 0.29

 

4. Global Ship Lease, Inc. ( GSL): Engages in owning and chartering out containerships under long term time charters. Market cap at $299.86M, most recent closing price at $5.53.

P/E: 8.64

Forward P/E: 9.69

P/B: 0.67

 

5. Petrobras Argentina SA ( PZE): Operates in the oil industry worldwide. Market cap at $1.08B, most recent closing price at $5.27.

P/E: 10.76

Forward P/E: 5.46

P/B: 0.65

 

6. Sibanye Gold Limited ( SBGL): Operates two gold mines, the Kloof Driefontein Complex (KDC) and the Beatrix gold mines. Market cap at $979.36M, most recent closing price at $5.41.

P/E: 13.2

Forward P/E: 7.48

P/B: 0.95

 

 

( List compiled by James Dennin, a Kapitall Writer. Analyst ratings sourced from Zacks Investment Research, all other data sourced from Finviz.)

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