Should you buy a company that's available at
1. Low PE (Cheap)- Less than 7
2. Attractive Dividend Yield (More than 4%)
Here's what one stock with the above characteristics has done in an extremely bullish environment - Ford
Just because stock looks attractive on fundamental parameters does not make stock a buy. If market is worried about the future of the industry/business for whatever reason - the stock will fail to outperform. I tweeted about the stock in Oct 2016
Ford: PE = 6; Dividend Yield = 5% - Why no takers
Value Trap? pic.twitter.com/D6RbIMPScz
— Deepak Singh (@smarket) October 11, 2016
There is market view that Auto Industry is set for massive disruption from ride sharing to connected cars to Electric cars to Self driven cars. And it's quite simple to understand - why market is little cautious to take a big bullish position before such dramatic change. Now, you can disagree with that stance. Ford continues to sell record number of pick-up trucks - it's most profitable product but when you are in the market - It is the Opinion of the market that counts.
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Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers