When it comes to the sharemarket, the concept of value can often be a relative term. For example, NIB Holdings Limited (ASX: NHF) looks 'cheap' when compared to Medibank Private Ltd (ASX: MPL) as they operate in the same industry. NIB trades on a lower price to earnings (PE) ratio and has a higher dividend yield, however, they both look expensive on the same metrics compared to the finance industry.
The 11 cheapest stock on the ASX
With this in mind, if we look at the large and medium-cap stock on the ASX, using a blanket filter of a PE ratio of 10 and below, we should find cheap stocks right? Here are the top 11 'cheapest' stocks on the ASX (based on Commsec numbers):
| Company | Trailing PE Ratio |
| Seven West Media Ltd (ASX: SWM) | 4.1 |
| Slater & Gordon Limited (ASX: SGH) | 6.0 |
| Genworth Mortgage Insurance Australia (ASX: GMA) | 6.7 |
| Nine Entertainment Co Holdings Ltd (ASX: NEC) | 6.9 |
| AIR N.Z. FPO NZ (ASX: AIZ) | 7.4 |
| EVOLUTION FPO (ASX: EVN) | 8.1 |
| Worleyparsons Limited (ASX: WOR) | 8.1 |
| Downer EDI Limited (ASX: DOW) | 8.1 |
| Primary Health Care Limited (ASX: PRY) | 8.5 |
| Origin Energy Ltd (ASX: ORG) | 9.7 |
| Qantas Airways Limited (ASX: QAN) | 9.9 |
In the breakdown, we have two media companies, two airlines, four companies exposed to mining or oil and gas, one healthcare company, one mortgage insurer, and one legal firm.
Are these the 11 cheapest stock on the ASX?
Each of the companies in the list above are 'cheap' for a reason. Most have industry-specific issues to deal with, while companies like Slater & Gordon and Genworth have been sold down due to massive concerns over their future.
Investing in one or several of these cheap companies could either mean big losses or reasonable gains over the next 12 months if things turn around.
Take, for example, the television industry. The advertising market once dominated by TV stations such as Nine and Seven has been decimated by online streaming services that offer advertisers access to specific demographics and personal interests that TV could never offer. Advertising COULD rebound somewhat, or a major player could leave, resulting in Nine or Seven picking up more market share, however this is a larger share of an ever-dwindling market- not something you really want to be exposed to.
