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Low PE Ratio Stocks

While making investment decisions, it is important to look at financial ratios. One of the important financial ratios is the Price to Earnings (PE) ratio.

PE ratio as the name suggests is the relationship between the share price of a company and its earnings. PE ratio is derived by dividing share price by earnings per share (EPS).

PE ratio indicates how much an investor is willing to pay for each rupee of profit earned. It shows the intrinsic attractiveness of a company.

When a company's PE ratio is lower than a justified PE ratio, the company is believed to be undervalued.

If a low PE ratio stock is fundamentally strong, then there's a good chance the company may perform well in the future. Companies with strong fundamentals but low PE ratios might grow rapidly in the future, thus generating high returns for investors.

Hence, low PE stocks with strong fundamentals are a good investment opportunity.

However, studying the PE ratio in isolation may not give a clear picture. There are various aspects that an investor has to consider while selecting fundamentally strong stocks.

Check out Equitymaster's powerful stock screener for finding the low PE stocks.

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