It's fun to be cheap! Not like a miser, but someone who looks for an inexpensive way to get the same good things they regularly want. We call those people frugal or thrifty. I just call them smart.
I love mangoes and we're in the middle of mango season in Queensland. Every day I go out for a walk early in the morning before other walkers make their rounds and pick up ripe mangoes that have fallen off of some neighbourhood trees overnight.
Later, when I go to my local supermarket, I enjoy seeing how much money I saved by collecting those mangoes.
Investors need that thrifty mindset. Like the mangoes, you snap up the good ones after they have fallen and are easy to pick up. If you do so at opportune times, you may not have to pay the "regular" market price later on.
Looking over some stocks, I noticed two cheap ones – maybe some of the cheapest you can find now.
1) Origin Energy Ltd (ASX: ORG) has gotten clobbered like all the other oil and gas stocks from the jaw-dropping fall in oil prices. That's the law of supply and demand. Soon, though, the integrated energy company will begin shipping LNG exports from its Australian Pacific LNG project in 2015. Until oil prices recover, it may get less revenue on the spot market, but it should have more revenue and earnings in the years ahead.
Still, oil could go lower, so this may not be the bottom just yet. I suggest watching the stock patiently for a place to enter. The stock is at a 15 PE – historically low for the company – and pays a 4.7% unfranked yield.
2) Aristocrat Leisure Limited (ASX: ALL) isn't bumping along the bottom, but is bobbing around the top of its recent share price range. The electronic game machine producer is forecast to have strong earnings growth over the next several years. It has expanded its machine business in the US, so revenues are expected to rise. Aristocrat is also developing online social gaming apps for a growing market. The games may be free, but players can buy special features or additions, which generate revenue for Aristocrat.
Compared to the expected earnings growth rate, the 23 price-earnings ratio seems relatively cheap. The stock pays a 2.3% yield unfranked. It could go higher when the earnings from the business expansion flow through. Earnings may also get a boost when US$-denominated revenue is reported back into weaker Aussie dollars.
