Benjamin Graham is revered as the father of value investing, including teaching Warren Buffett and Walter J. Schloss, and writing the famous investing book with David Dodd, Security Analysis and then The Intelligent Investor, The Definitive Book on Value Investing.
He was well known for trying to buy companies trading on low valuation multiples, as well as those trading well below book value. If you want to beat the S&P/ASX 200 Index (index: ^AXJO) (ASX: XJO), then following Graham's philosophy could prove to be a winner.
Here are 3 ASX-listed companies trading on very low multiples with great prospects…
Maca Ltd (ASX: MLD)
Maca provides mining and crushing services to iron ore and gold companies, as well as civil construction projects. Today the company announced that it expects to report a net profit after tax of more than $49.5 million for the 2014 financial year, placing it on a P/E ratio of less than 7, and paying a fully franked dividend yield of over 6%. Maca is also holding $167 million in cash and investments, around half its market cap. 2015 financial year revenues are expected to be more than $600 million, almost double what the company earned in 2012.
Select Harvests Limited (ASX: SHV)
Select Harvests is Australia's second-largest almond producer, trading on a prospective P/E ratio of around 10 times, and paying a dividend yield of just under 4%. Revenues could be set to surge thanks to a drop off in capital expenditure and 25% of the company's trees have just hit maturity age. All up 73% of the company's trees are now mature, meaning low capex and high cash generation. Consumers have become more aware of the healthy benefits of almonds, and global demand has recently overtaken supply.
Alliance Aviation Services Ltd (ASX: AQZ)
Alliance provides fly-in, fly-out services to the mining, oil and gas industry, mainly in Queensland and Western Australia. According to Bloomberg forecasts, the company is trading on a prospective P/E ratio of just 6.2 and boasting a fully franked dividend yield of over 8%. The company is also trading below book value, and recently won a 3-year contract extension with BHP Billiton Limited (ASX: BHP).
Searching among the unloved sectors of the market can prove to be a worthwhile exercise for long-term investors. And if these three ideas don't float your boat, you might want to take a look at this…
