Record highs in the S&P 500 may be good news for many, but perhaps not as much for value investors hunting for bargains at a time when valuations are becoming more and more elevated. The result is that some of the biggest winners in the market also have price-to-earnings (P/E) multiples far above their long-term averages, forcing value-focused investors to take a chance on companies despite valuations outside of their comfort zone.
This doesn't mean that deals don't still exist, however. While it may be increasingly rare, there are still firms that are of a high quality but that trade at low P/E ratios. Not the result of deteriorating business models, the companies below may be value prospects with the capacity to grow—their expanding profitability is evidence that they are solid investment targets that are just priced below what they may be worth.
