The S&P 500 is currently trading for about 26 times trailing earnings. That’s at the high end of its historical range, which is making it hard for value investors to find attractive stocks to buy. Thankfully, even during times of market euphoria, investors can still find value if they’re willing to turn over enough rocks.
Let’s take a closer look at three income stocks — Scripts Network Interactive(NASDAQ:SNI), Amgen(NASDAQ:AMGN), and Carnival (NYSE:CCL)(NYSE:CUK) — that all pay out solid dividends and trade for below-average multiples. With analysts calling for earnings growth over the long term, could they be attractive buys today?
Investors have serious concerns over what the future holds for cable TV, which has caused them to approach companies like Scripps Networks Interactive with caution. This company owns a number of hit cable channels like the Food Network, HGTV, and the Travel Channel that are all dependent on attracting eyeballs in order to keep the revenue flowing.
With all signs pointing to cord-cutting being a trend that isn’t going to reverse itself anytime soon, traders have cut Scripps’ P/E ratio nearly in half since early 2014. As a result, share now trade for less than 12 times trailing earnings, which could be a ridiculously cheap price.
Thankfully, Scripps Networks’ strong programming has largely helped it to overcome the downward pressure on viewing. Ratings on the company’s top channels are actually on the rise, which has translated into increased ad and affiliate fees. That allowed the company’s sales to grow by more than 3% last quarter, which was a far better showing than larger rivals such as Walt Disney and Time Warner can claim.
Looking ahead, market watchers believe Scripps’ strong programming will help it overcome the effects of cord-cutting and allow it to put up profit growth of more than 10% annually over the next five years. That’s a solid growth rate for a company that offers up a 1.4% dividend yield and is trading at such a cheap valuation.