After a record trading year for stocks, investors may find opportunity with some companies that have traded at significant discounts on a forward price-to-earnings ratio basis in recent history. The past year has seen all three major averages score multiple new intraday and closing highs, with some of those taking place during this trading month. The S & P 500 and Nasdaq Composite kicked off December setting fresh record closes. Shortly after that, the Dow Jones Industrial Average notched its first close above 45,000. As it stands, the Nasdaq is leading the three indexes in terms of year-to-date gains, with the tech-heavy index moving above 31%. The broad market S & P and the blue-chip Dow have risen around 25% and almost 14%, respectively, this year. Against this backdrop, Trivariate Research screened for stocks in its mega-/large-/or mid-cap universe — or the top 900 stocks by market capitalization — whose forward P/E ratios have dropped below 10 times earnings for the first time in the past five years and have had positive earnings in at least four of the past five years. The research firm also omitted stocks in the financials and energy sectors, metals and REITs. Here are some that met this criteria. Shares of First Solar — which first dipped below 10 times earnings at the end of October, trading at 9.3 times forward on that month’s last trading day — have underperformed the broader market this year by gaining around 8% year to date. The solar stock currently has a P/E ratio over the next 12 months of around 9, according to FactSet. The stock has especially struggled in the wake of President-elect Donald Trump ‘s victory amid fears that his second term could threaten the Inflation Reduction Act, which includes tax credits for renewable energy that have benefited the solar sector. Since the election outcome, First Solar has fallen more than 13%. But analysts believe the name could still be a winner in the face of Trump’s policy changes. Currently, 34 of the 41 analysts covering it on Wall Street have a strong buy or buy rating, while the remaining seven have a hold rating, according to LSEG data. Its average price target of $274 implies around 47% upside potential from here. Expedia first dipped below 10 times earnings at the end of 2022, trading at 9.4 times on Dec. 30 that year. The online travel stock has a P/E over the next 12 months of 13.4. Most of the Street has taken a less-bullish stance on the stock, as 26 out of 38 analysts covering it have a neutral stance. By contrast, the remaining 12 have a strong buy or buy rating, with Bank of America recently upgrading the stock to buy from neutral amid signs of improving trends in the U.S. travel market. While the name has also underperformed the broader market this year, it has still been solidly in the green, rising more than 24% year to date and around 31% over the past three months. EXPE 3M mountain EXPE, 3-month 3M was also on the list, having traded at 9.9 times earnings on Sept. 29, 2023. That stock has a P/E over the next 12 months of 16.3. This year, the stock has surged more than 41%, beating out the S & P 500 in year-to-date gains. Other names on the list include Sirius XM , which Warren Buffet’s Berkshire Hathaway recently purchased more shares of . That stock has fallen more than 57% year to date and has a P/E ratio over the next 12 months of 8.5.
