5 Good Stocks to Buy While They Are Cheap

Cash in on these solid companies while you can still get them at price-earnings ratios of 10 or less.

Even after kicking off the new year with a 6% slide in the first week of trading, the stock market doesn’t look cheap. Corporate profits have been slumping over the past few quarters, and Wall Street earnings estimates are falling—keeping a lid on the market’s price-earnings ratio. Companies in Standard & Poor’s 500-stock index on average trade at 15 times estimated 2016 earnings. That means investors are paying $15 for a dollar of profits, only slightly below the 25-year average, according to J.P. Morgan.

Yet plenty of big-name stocks trade well below the average P/E. These aren’t battered oil drillers or mining companies whose only hope of a rebound is a recovery in prices of energy or raw materials. Some healthy biotechnology, financial and technology firms have P/Es in the low double digits, in many cases below 10. Even a few stocks in the energy patch look like bargains—and don’t need a recovery in oil prices to lift their fortunes.

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Daren Fonda
Senior Associate Editor, Kiplinger's Personal Finance
Daren joined Kiplinger in July 2015 after spending more than 20 years in New York City as a business and financial writer. He spent seven years at Time magazine and joined SmartMoney in 2007, where he wrote about investing and contributed car reviews to the magazine. Daren also worked as a writer in the fund industry for Janus Capital and Fidelity Investments and has been licensed as a Series 7 securities representative.