One stock that is too tiny for even a small-timer like myself (though it would have interested me a few years ago) is Xentel DM (XDM), a telemarketing company. The stock's P/E of 3 is likely so low because the company trades less than $1,000 worth of stock in an average day. For readers with decent-sized portfolios, this stock is of no use. For young, up-start readers with long-term outlooks and still budding portfolios, however, this company could offer long-term value.
The company operates off of 3-5 year contracts with its customers, and charges fees based on the hours spent telemarketing client products to consumers. This model makes for stable earnings, as the company can adjust costs easily such that they line up well with expected revenues. Indeed, despite the recession that has reduced the number of marketing dollars companies will spend, Xentel has been able to reduce costs at a faster rate than revenues declined and in the end actually increase profits.
The company does not come without risks, however. The company recently acquired another telemarketing company using Xentel's own shares; but if one is to share stock with a P/E of 3 in an acquisition, one better receive an outstanding valuation in return! At least shareholders can rest easy knowing management's interests are aligned with theirs, as both the company's chairman and its president each own 20% of the company. As such, the target company was likely another company that is trading at a low multiple of its earnings.
Xentel DM is cheap and has a flexible business model that should keep earnings relatively stable. Those with portfolios of a small enough size may benefit from this stock over the long term.