5 Stocks Cheaper Than Apple's, With Better Growth Prospects

Last Updated Nov 3, 2010 7:49 PM EDT

Apple stock (AAPL) is struggling to recover from the sharp drop it took after the company issued an earnings report that was broadly in line with Wall Street forecasts but failed to live up to apparently higher expectations that had sent the stock soaring in preceding weeks. After peaking at $319 on Oct. 18, Apple closed Wednesday at $312.80.

With the price still high, shareholders may want to take profits and put them to good use elsewhere, and investors who missed the boat may prefer to hop aboard a less flashy but potentially sturdier craft. There are plenty to choose from, including nearly 200 companies that are cheaper than Apple, based on its price-earnings ratio of 20.4, and for which analysts have higher earnings forecasts than the 16 percent five-year annualized growth rate projected for Apple.

The companies are scattered across many industries and are big and small, foreign and domestic. The ones that seem to have the most attractive prospects tend to be based abroad. Here are five examples:

Research in Motion (RIMM) is an old favorite of this blog, although not a favorite among investors lately. Dissatisfaction with some of the Canadian company's new products, especially the BlackBerry Torch and the PlayBook tablet computer, has left the stock trading at less than 11 times earnings, yet Wall Street still predicts annual earnings growth of nearly 22 percent.

Toyota Motor stock (TM) plunged early this year when problems with the accelerators on some models came to light. The share price has been stuck in the low $70s for much of the time since then, despite the progress that Toyota has made in fixing faulty cars and making adjustments to avoid new defects. Even with sagging earnings, the result of the sluggish global economy, as well as the cost of the massive recalls, Toyota has a PE of less than 19. Its earnings are forecast to make a strong recovery - accelerate, you might say - with five-year annualized growth of 33 percent.

China Petroleum & Chemical, better known as Sinopec (SNP) gives investors two hot stories to play - China and commodities - for the price of one. Actually, with its PE ratio of less than 9, far below the valuation of the broad market, Sinopec offers two hot stories for considerably less than the price of one. Just how hot the stories are is suggested in the 28 percent annual earnings growth forecast for Sinopec.

JA Solar (JASO) embodies those same two popular investment themes plus a third: environmental protection. As with Sinopec, an investment in JA Solar, a Chinese maker of solar cells, allows big ideas to be snapped up at small prices. The stock trades at about 13 times earnings, with nearly 24 percent annual earnings growth forecast.

Navios Maritime Holdings (NM), a Greek shipping company, is dirt cheap by nearly any standard of measurement. Navios trades at less than 6 times earnings and just 0.6 times book value, or the intrinsic worth of its net assets. Few big-time analysts follow the company, which has a market value of about $600 million. The small size may account for the lack of coverage, or maybe it's the other way around.

Navios does have a lot of debt on its books - roughly three times the company's equity - but that's common for shipping companies, and Navios evidently has no trouble covering payments from its operating earnings. Being Greek probably causes investors to look askance too. All of those factors must not be too bad for business, however. Navios is expected to increase earnings by an enormous 45 percent a year.

Cars, cargo ships and oil may not have the cachet of an iPad, and none of these five stocks can inspire the feverish desire that Apple does. But when it comes to investing, it's generally better to buy before something becomes too hot or too cool.