I believe easyJet (LSE: EZJ) is one of the hottest contrarian picks out there, particularly at current share prices.
The orange-and-white flyer was already on the defensive prior to Junes EU referendum. But concerns over deteriorating demand in Brexit Britain, allied with rising currency pressures and intensifying market competition, have taken the hatchet to easyJets stock value. The airline shed 42% of its value during 2016.
Consequently the budget carrier trades on a P/E ratio of just 11.6 times for the year to September 2017, while the company also carries a super dividend yield of 4.3%.
A predicted 21% earnings decline illustrates the near-term challenges facing easyJet, as does a predicted dividend cut to 42.6p from 53.8p in fiscal 2016.
Having said that, I reckon the increasing pressures on UK travellers wallets should drive electric demand for easyJets cheap plane tickets still higher. And Im convinced the operators ongoing expansion drive should set it up for stunning long-term sales growth across the continent.
The complete package
I also believe Smurfit Kappa (LSE: SKG) is a terrific bet for those seeking stunning value selections.
The newly-listed FTSE 100 member has excellent exposure to developed and emerging economies alike, Smurfit Kappa currently operating in 21 countries across Europe and more than a dozen in the Americas.
Itpurchased two Brazilian paper packaging firms at the start of the year, representing the companys first foray into Latin Americas biggest economy. As well as bolstering itsopportunities in fast-growing sectors, the firms expanding geographic presence clearly provides it with splendid earnings visibility.
And Smurfit Kappas ability to generate wads of cash gives it plenty of firepower with which to make further exciting purchases free cash flow registered at a meaty 164m during the third quarter.
An expected 4% earnings advance in 2017 leaves it dealing on a meagre P/E ratio of 10 times. And the firm also carries a chunky 3.8% dividend yield for next year. I reckon this is a snip given the packaging giants hot growth prospects.
Battered by Brexit
Like Smurfit Kappa and easyJet, outsourcing play Capita Group (LSE: CPI) could also be considered too cheap to miss at current prices.
However, I reckon its57% share price slide in 2016 is warranted given the companys increasingly-worrisome revenues outlook as businesses defer investment decisions in the Brexit environment. And this backcloth appears set to persist as the UKs self-extraction from the EU promises to be a prolonged and painful process.
Indeed, the City expects earnings at Capita to slip 3% in 2017, following an expected 9% fall last year.
Capita issued yet another profit warning last month as business continued to dry up. And I reckon that this years already-unappealing earnings forecasts could be subject to swingeing downgrades in the weeks and months ahead.
Itsultra-low valuations are a fair reflection of its sky-high risk profile the firm carries a P/E ratio of 8.5 times and a 6% dividend yield. The Footsie giant isnt a strong contrarian selection, in my opinion, and I reckon share investors should avoid getting burnt and shop elsewhere.
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