February 04, 2008 at 1:00 am by Tom Lydon
Bargain shoppers may have their time cut out for them, as many exchange traded funds (ETFs) are touting low price-to-earnings ratios (P/E Ratios).
The P/E Ratio is a valuation of a company’s current share price compared to its per-share earnings. Generally, a high P/E indicates that investors are expecting higher earnings growth in the future.
The exact bottom of some of the most beat up sectors is unknown, but long-tern value seekers should be on the lookout, according to Gary Gordon for ETF Expert.
Gordon points out the Dow Jones US Insurance Index (IAK) which is near its 52-week low, and trading at a multiple of 8.7. It’s been bearing the brunt of the subprime mess, however, don’t forget how profitable insurance companies can be.
iShares Nasdaq Biotechnology Index (IBB) is trading at a P/E of 11, where biotech companies usually have a historic multiple of 20.
At the bottom of the bin is the S&P Homebuilder Index (XHB) at a P/E of 4.25. This is for the hardiest of investors who can see long-term opportunities amidst all the gray.
Tags: Biotechnology, Financial, Real Estate
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