“The loser now will be later to win…” – The Times They Are a Changin’

Bob Dylan probably wasn’t thinking about portfolio management when he banged out these lyrics on a typewriter in 1963. But in the current market environment (or just about any, for that matter), it's pretty good advice.

Equity and high yield fixed income markets have been beaten like a rented mule since the end of last year and the beginning of this shiny New Year. The S&P 500 index (SPX) is off better than 10% from its historical high.  You’d think there would be some opportunity here. There is.

The forward PE ratio for the SPX has adjusted by around 8% from about 17 times estimated earnings per share (EPS) to around 15 times, according to research by Birinyi Associates. Not a bad discount and certainly a more reasonable forward PE. But I’m cheap (just ask my kids).

Even if the “market” is at a discount on a PE basis, I want to pay less. I also want to get paid more. The current dividend yield for the SPX is 2.27%.  Not bad. But there’s better yield out there.

I’ve been using recent market weakness to nibble at high-quality equity names with metrics well below that of the SPX.

CA, Inc. (CA) –Formerly Computer Associates, CA develops systems software and applications primarily for mainframe environments. They’re not trying to see how many tablets or smartphones they can peddle to consumers. This is big ticket, high margin, enterprise (business to business) technology. While revenue and earnings have been relatively flat over the last five years, they’ve been consistent. Debt is extremely low and the cash pile equates to a little better the $4.50 a share. Pretty strong for a $25ish stock. CA, to me, has also looked like an attractive acquisition candidate.

Ford Motor Company (F) – I’d consider Ford the best run of all of the major auto manufacturers. The company weathered the storm of 2008-2009 without government help and is stronger for it today. U.S. light vehicle sales have been growing recently thanks to favorable interest rates and the inevitable aging out of the American passenger car and light truck fleet. Lower oil prices haven’t hurt either as Ford has capitalized on this trend with its higher-margin light trucks and SUVs. The company has also invested heavily and wisely in technology ancillary to automobile platform evolution.

A few weeks ago, I profiled three other names: Archer Daniels Midland (ADM), Cisco Systems (CSCO), and Johnson Controls (JCI) here on TalkMarkets

As a basket, these stocks trade with a dividend yield of 3.83%, 68% higher than that of the benchmark, and a forward PE of 9.9; a 36% discount to the SPX’s forward multiple.

That’s my definition of buying low. Hopefully, we’ll get to sell high.

All of these companies are high quality businesses with strong, historic franchises and consistent operating histories. And the share prices are very attractive. Headwinds be damned.