10 of the cheapest shares on the ASX: March update

Investors rarely get wonderful companies at cigar butt prices. Nonetheless, cigar butts can be extremely profitable investments. Those ‘cigar butt’ companies may not be the most wonderful companies on the ASX, but when average companies are available at bargain prices investors can benefit.

In February, to find companies currently trading at wonderful prices, I sorted ASX stocks over $300 million in market capitalisation by their Sonkin Ratio. The Sonkin Ratio is a robust version of the Price to Earnings ratio. The Sonkin Ratio is simply the Enterprise value of a company divided by its operating earnings adjusted for tax. It can be expressed as:

Sonkin Ratio = (Market capitalisation – Cash + Debt) / EBIT(1 – Tax rate)

The Sonkin Ratio is the multiple of tax-adjusted operating earnings an investor would pay for the stock. Or, how much an investor would have to pay for every dollar of operating earnings.

Here is a March update on 10 of the cheapest companies on the ASX and their Sonkin Ratios.

Gold Road Resources Ltd (ASX: GOR) – 2.98

Spotless Group Holdings Ltd (ASX: SPO) – 4.03

Nine Entertainment Co Holdings Ltd (ASX: NEC) – 4.57

Mount Gibson Iron Limited (ASX: MGX) – 4.95

Village Roadshow Ltd (ASX: VRL) – 5.49

Tribune Resources Ltd (ASX: TBR) – 6.49

Resolute Mining Limited (ASX: RSG) – 6.58

United Overseas Australia Limited (ASX: UOS) – 7.25

Seven West Media Ltd (ASX: SWM) – 8.00

Myer Holdings Ltd (ASX: MYR) – 8.06

Fortescue Metals Group Limited (ASX: FMG) – 8.2

Foolish Takeaway

These are 10 of the cheapest stocks on the ASX over a market capitalisation of $300 million. Of course, there are many and varied reasons for why they are cheap. Distinguishing between those that represent bargain prices, and those that are companies in terminal decline is the difficult part.

Don’t Buy A SINGLE Stock Until You Read This

While conflict overseas is all media talking-heads seem to mention these days, the billionaire founder of Tesla is losing sleep over what he sees as a far bigger threat.

Elon Musk Warns: This has “vastly more risk than North Korea”

If you missed your opportunity to get in on Google, Microsoft, or Amazon in their early days, don't let it happen again. This emerging technology trend could offer a second chance for anyone who wishes they took part in these millionaire-maker stocks.

Click here to discover more!

Motley Fool contributor Stewart Vella owns shares of Fortescue Metals Group Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!