5 Top Contrarian Plays for The Bull Economy

Mitchell Mauer  |

Contrarian Approach is a simple screen which finds solid companies trading at low price ratios.

The screen is inspired by David Dreman’s contrarian investment philosophy. Dreman believes strongly in market overreactions and the principle of mean reversion.

His research and professional experience shows that a diversified list of financially strong, adequately sized companies, currently out-of-favor with the market, “provide superior returns over time.”

Click here to learn more about the Contrarian Approach stock screen.

Top 5 Contrarian Stocks

Here’s a breakdown of the top 5 contrarian stocks. These stocks have the lowest price ratios after meeting the following criteria:

  • Market Capitalization > $1 Billion
  • Current Ratio > 2
  • Debt/Equity < 0.5

Universal Corp. (UVV): Involved in procuring, financing, processing, packing, storing, and shipping leaf tobacco for sale to, or for the account of, manufacturers of consumer tobacco products.

  • Market Capitalization: $1.6 Billion
  • Price to Earnings: 13.84
  • Price to Book: 1.12
  • Price to Free Cash Flow: 5.50
  • Current Ratio: 6.27
  • Debt/Equity: 0.31
  • Closing Price on 12/6/16: $58.05

Benchmark Electronics, Inc. (BHE): Provides integrated electronic manufacturing services in the Americas, Asia, and Europe.

  • Market Capitalization: $1.4 Billion
  • Price to Earnings: 17.40
  • Price to Book: 1.08
  • Price to Free Cash Flow: 5.49
  • Current Ratio: 3.69
  • Debt/Equity: 0.17
  • Closing Price on 12/6/16: $29.15

Valero Energy Corp. (VLO): Refines and markets petroleum such as gasoline, jet fuel, asphalt, petrochemicals and more.

  • Market Capitalization: $3 Billion
  • Price to Earnings: 13.41
  • Price to Book: 1.46
  • Price to Free Cash Flow: 13.56
  • Current Ratio: 2.05
  • Debt/Equity: 0.44
  • Closing Price on 12/6/16: $64.72

Dril-Quip, Inc. (DRQ): Designs, manufactures, sells, and services offshore drilling and production equipment for use in deepwater, harsh environment, and severe service applications worldwide.

  • Market Capitalization: $2.3 Billion
  • Price to Earnings: 16.16
  • Price to Book: 1.64
  • Price to Free Cash Flow: 9.45
  • Current Ratio: 13.34
  • Debt/Equity: 0.00
  • Closing Price on 12/6/16: $60.40

Guess?, Inc. (GES): Markets, distributes and licenses a lifestyle collection of contemporary apparel and accessories.

  • Market Capitalization: $1.1 Billion
  • Price to Earnings: 17.52
  • Price to Book: 1.10
  • Price to Free Cash Flow: 13.51
  • Current Ratio: 2.90
  • Debt/Equity: 0.02
  • Closing Price on 12/6/16: $13.41

Implementation

Due to the nature of deep value strategies such as the Contrarian Approach, average investors will find numerous reasons not to buy the above stocks.

Disciplined investors, on the other hand, will find success following such a simple investment strategy.

You can build your own portfolio using the stock screens on TheStockMarketBlueprint.com.

Check out our Shadow Stock Portfolios to see real-world examples of implementing systematic investment strategies.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

Companies

Symbol Name Price Change % Volume
BHE Benchmark Electronics Inc. 33.86 0.33 0.98 180,534 Trade
VLO Valero Energy Corporation 100.61 -0.21 -0.21 2,487,576 Trade
DRQ Dril-Quip Inc. 44.92 0.71 1.61 212,983 Trade
GES Guess? Inc. 17.99 0.43 2.45 853,589 Trade
UVV Universal Corporation 51.00 0.10 0.20 251,732 Trade

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DIS

     
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