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Tickers in this Article: BA, COMS, MO, BAC, SWY, CAL, UAUA, AMR
The major indexes have taken big hits over the past year and there are a lot of companies that are trading at a low multiple of the current year's expected earnings. However, based on expected earnings, there are far fewer publicly traded companies that sport a low price to earnings ratio (P/E) and are still expected to post earnings growth.

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When I use the term P/E, I am basing the number on the current year's expected earnings. When I refer to expected earnings growth I am talking about companies that are expected to post earnings per share (EPS) numbers in the current year that are higher than last year. I think that companies that fit the above description are worthy of further research, so let's take a look at a few that match up.

Company Market Cap P/E Year End
3Com Corporation (Nasdaq:COMS) $905 million 6.0 May 2009
Altria (NYSE:MO) $33.9 billion 9.5 Dec. 2009
Bank of America (NYSE:BAC) $31.6 billion 8.7
Dec. 2009
Boeing (NYSE:BA) $24.2 billion 6.5 Dec. 2009
Safeway (NYSE:SWY) $7.9 billion 8.2 Dec. 2009
As of market close March 11, 2009


Look at Boeing for the Long Term
The major airlines are taking it on the chin these days. As evidence, look at recent financial results from Continental (NYSE:CAL), UAL Corporation (NYSE:UAUA) and AMR Corporation (NYSE:AMR). Continential gave full-year results on January 29, reporting a net loss of $585 million or diluted earnings per share of -$5.54 (including previously announced special items). AMR and UAI also took huge hits to the bottom line. Even with this in mind, I still believe that demand for air travel will perk up materially once this economy shows some signs of life, and if you accept that, then Boeing is a no-brainer for the long term.

Promising New Product
Boeing has some other attractive features. For example, after experiencing several delays, the company indicated that it remains on track to deliver the highly anticipated first 787 aircraft in 2010. I think that this new aircraft will be in high demand, as the 787's most attractive feature is its lack of fuel consumption. According to Boeing's website, the 787 will "bring the economics of large jet transports to the middle of the market, using 20% less fuel than any other airplane of its size." (Learn if airline stocks are ready to fly high or crash and burn. See Is That Airline Ready For Lift-Off?)

Clouds with Silver Lining
I want to also make clear that although the earnings estimate for the current year has come down pretty sharply over the last 90 days, almost $1, Boeing is still expected to earn a hefty $5.11 a share in the year ending December 2009. In 2010, the company is expected to earn $5.24 per share. The shares trade at a lowly 6.5 times the current year estimate, but last year it earned $3.67 a share.

Boeing also offers a dividend. In December it was announced that its board upped the dividend by two cents to 42 cents per share. The forward yield is north of 5%, which is kind of like a bonus in my mind, even though dividends are not guaranteed.

Finally, I think it's telling that the company has been buying back stock. In Boeing's last 10-K, it released the following information: "During 2008, we repurchased 42,073,885 shares at an average price of $69.79 in our open market share repurchase program." I think that the board agreed to these repurchases because it thought the shares were ultimately a good value. (Find out what these company programs achieve and what it means for stockholders, check out A Breakdown Of Stock Buybacks.)

Bottom Line
There are many companies that trade at a low multiple of expected earnings, but there are far fewer companies in the public domain that sport a low forward P/E. For Boeing, expect earnings to grow, and to cash in on a 5% dividend yield in the meantime.

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