1. You've probably heard financial analysts comment that a stock is selling for some number "times earnings,"...

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You've probably heard financial analysts comment that a stock isselling for some number "times earnings," such as 30-times earningsor 12.5-times earnings. This means that P, the price the stock iscurrently trading at, is 30 times higher than E, the company'sannual earnings per share, or EPS.. However, for now, all you needto know is that value investors like the P/E ratio to be as low aspossible, preferably even in the single digits. The number thatresults from calculating P/E is called the earnings multiple. So astock that sells for $50 (P) and generates $2 EPS (E) would have anearnings multiple of 50/2, or 25. A value investor would normallypass on this stock. (For more information, readInvestors Beware:There Are 5 Types Of Earnings Per Share.) Earnings Yield Earningsyield is simply the inverse of the earnings multiple.. So a stockwith an earnings multiple of 5 has an earnings yield of 1/5, or0.2, more commonly stated as 20%. Since value investors like stockswith a low earnings multiple and earnings yield is the inverse ofthat number, we want to see a high earnings yield. Orimarily a highearnings yield tells investors that the stock is able to generate alarge amount of earnings relative to the share price. Go to theYahoo Finaance Stock Screener athttp://screener.finance.yahoo.com/stocks.html (Links to an externalsite.) (Links to an external site.) (Links to an external site.)This tool will allow you to search for stocks using various searchcriteria, including industry, PE Ratio range, Dividend yield etc.Locate three stocks that you believe are a good "VALUE" based uponyour search. as a rule of thumb, you should always compare yourinvestments to their peers within the industry. For example if youcompare Ford Motor with Toyota, you will see that there is littlevariance between the PE ratios and the dividend yield of these twofirms. If, however, Ford was yielding much more (higher dividendyield) than Toyota and other automobile manufacturers, this mightindicate that Ford is a far risker investment, because a yield thatvaries from the industry average is a warning sign.
ASSIGNMENT: After you screen for good value stocks based uponwhatever screening criteria you choose, discuss the threeinvestments, why you think they are good values right now, and whatcriteria you used to screen for these stocks

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The three stocks that I believe are good value are1 ATT2 Valero Energy Corp3 The Travelers Companies IncThe screening criteria used for selecting these stocks isprovided below as a screenshot of the Yahoo Finance webpagePlease find bellow the reasons for these selections1 ATT PricetoEarnings ratio of ATT is low at1059 The industry See Answer

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1.You've probably heard financial analysts comment that a stock isselling for some number "times earnings," such as 30-times earningsor 12.5-times earnings. This means that P, the price the stock iscurrently trading at, is 30 times higher than E, the company'sannual earnings per share, or EPS.. However, for now, all you needto know is that value investors like the P/E ratio to be as low aspossible, preferably even in the single digits. The number thatresults from calculating P/E is called the earnings multiple. So astock that sells for $50 (P) and generates $2 EPS (E) would have anearnings multiple of 50/2, or 25. A value investor would normallypass on this stock. (For more information, readInvestors Beware:There Are 5 Types Of Earnings Per Share.) Earnings Yield Earningsyield is simply the inverse of the earnings multiple.. So a stockwith an earnings multiple of 5 has an earnings yield of 1/5, or0.2, more commonly stated as 20%. Since value investors like stockswith a low earnings multiple and earnings yield is the inverse ofthat number, we want to see a high earnings yield. Orimarily a highearnings yield tells investors that the stock is able to generate alarge amount of earnings relative to the share price. Go to theYahoo Finaance Stock Screener athttp://screener.finance.yahoo.com/stocks.html (Links to an externalsite.) (Links to an external site.) (Links to an external site.)This tool will allow you to search for stocks using various searchcriteria, including industry, PE Ratio range, Dividend yield etc.Locate three stocks that you believe are a good "VALUE" based uponyour search. as a rule of thumb, you should always compare yourinvestments to their peers within the industry. For example if youcompare Ford Motor with Toyota, you will see that there is littlevariance between the PE ratios and the dividend yield of these twofirms. If, however, Ford was yielding much more (higher dividendyield) than Toyota and other automobile manufacturers, this mightindicate that Ford is a far risker investment, because a yield thatvaries from the industry average is a warning sign.ASSIGNMENT: After you screen for good value stocks based uponwhatever screening criteria you choose, discuss the threeinvestments, why you think they are good values right now, and whatcriteria you used to screen for these stocks