Serious Money: Cheapest Stocks Yet -- From 35 to 26

In this installment, I'll extend my examination to include P/CF and P/S figures with the results listed from best to worst.

Price-to-Cashflow (P/CF):

1. Verizon (VZ) 2.56
2. JPMorgan Chase (JPM) 3.46
3. AFLAC Inc (AFL) 3.97
4. Noble Corp (NE) 5.0
5. ConocoPhillips (COP) 5.08
6. American Electric Power (AEP) 5.44
7. Goldman Sachs Group (GS) 5.64
8. Darden Restaurants (DRI) 5.92
9. Xcel Energy (XEL) 6.34
10. Chevron Corp (CVX) 6.47
11. Travelers Companies Inc. (TRV) 6.81
12. United Health (UNH) 6.92
13. Chubb Corp (CB) 6.97
14. Lockheed Martin (LMT) 7.46
15. Hewlett-Packard (HPQ) 7.94
16. International Business Machines (IBM) 8.0
17. Campbell Soup (CPB) 8.43
18. Merck and Co (MRK) 8.67
19. EZ Corp (EZPW) 8.81
20. Hasbro (HAS) 8.84
21. Raytheon (RTN) 8.88
22. duPont (E.I.) deNemours (DD) 9.1
23. CVS Corp (CVS) 9.16
24. Autozone (AZO) 9.18
25. Kimberly-Clark (KMB) 9.28
26. eBay (EBAY) 9.39
27. Wal-Mart (WMT) 9.94
28. Johnson and Johnson (JNJ) 10.48
29. Archer-Daniels-Midland (ADM) 10.50
30. General Mills (GIS) 10.63
31. Pfizer (PFE) 10.64
32. Altria Group (MO) 11.0
33. Abbott Laboratories (ABT) 11.13
34. Bristol-Myers Squibb (BMY) 13.93
35. Sysco (SYY) 17.77

Based on the P/CF, these stocks still seem very cheap. Given that a 10.0 is about average I'm surprised that only two stocks of the 35 are notably higher. Hard to cut much using this criteria but I'm going to draw the line under eBay to find the best of the best among the values.

Price-to-Sales (P/S)

1. Archer-Daniels-Midland (ADM) 0.29
2. United Health (UNH) 0.41
3. Sysco (SYY) 0.45
4. CVS Corp (CVS) 0.48
5. Wal-Mart (WMT) 0.55
6. ConocoPhillips (COP) 0.56
7. Chevron Corp (CVX) 0.59
8. Lockheed Martin (LMT) 0.65
9. Darden Restaurants (DRI) 0.68
10. Raytheon (RTN) 0.82
11. Verizon (VZ) 0.99
12. Xcel Energy (XEL) 1.01
13. Hewlett-Packard (HPQ) 1.1
14. Hasbro (HAS) 1.13
15. Travelers Companies Inc. (TRV) 1.14
16. duPont (E.I.) deNemours (DD) 1.17
17. AFLAC Inc (AFL) 1.27
18. Autozone (AZO) 1.3
19. Chubb Corp (CB) 1.35
20. EZ Corp (EZPW) 1.35
21. Kimberly-Clark (KMB) 1.39
22. JPMorgan Chase (JPM) 1.4
23. Campbell Soup (CPB) 1.6
24. General Mills (GIS) 1.66
25. Goldman Sachs Group (GS) 1.80
26. International Business Machines (IBM) 1.83
27. American Electric Power (AEP) 1.90
28. Altria Group (MO) 1.97
29. Bristol-Myers Squibb (BMY) 2.26
30. Pfizer (PFE) 2.48
31. Abbott Laboratories (ABT) 2.73
32. Merck and Co (MRK) 2.73
33. Noble Corp (NE) 2.89
34. Johnson and Johnson (JNJ) 2.90
35. eBay (EBAY) 3.52

Again, one more factor portrays these stocks as value plays. Finding two-thirds in the value area of below 1.5 is very good, with many at 1.0 or less.

Cross checking the rankings, I am cutting nine stocks that are below the line in both screens or below the line in one and average in the other. In alphabetical order they are ABT, BMY, EBAY, GIS, IBM, JNJ, MO, MRK, and PFE. Five stocks were expensive in one regard, but excellent in the other: AEP, GS, NE, SYY, and WMT. I think it is important to remember that the nine stocks being removed include fine companies and all are worthy of a place on investors' watch-list. They just do not provide the best value right now. I actually own JNJ and MRK, but I bought them at a deep discount.

The next screen will examine return-on-investment (ROE) and debt.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: Among the positions discussed in this post I own shares of ADM, EZPW, JNJ, MRK, RTN and SYY..