Foot Locker, Inc. (FL), Bob Evans Farms Inc (BOBE): These Small Stocks Are Both Value And Income Plays

While I’d recommend investors wait for the dust to settle before jumping in, there’s no denying this is a highly profitable, growing company.

Speaking of highly profitable specialty retailers, Foot Locker, Inc. (NYSE:FL) is a $5 billion retailer of athletic footwear and apparel. Foot Locker, Inc. (NYSE:FL) reported fiscal 2012 net income of $2.47 per share, which represented a 36% improvement year over year. Same-store sales increased 9.4% last year. In addition, the company produced 14.2% return on invested capital in fiscal 2012.

Despite Foot Locker, Inc. (NYSE:FL)’s strong growth numbers and extremely effective management, the stock remains attractively priced. Foot Locker, Inc. (NYSE:FL) hasn’t rallied extensively in recent months and still trades for only 13 times its 2012 net income per share.

Making things even better, the company is generous to its shareholders. Foot Locker, Inc. (NYSE:FL) recently increased its dividend 11%. The new $0.80 per share annualized dividend represents a yield of nearly 2.5% for new investors. Furthermore, along with the recent dividend increase, the company announced it had authorized a new $600 million share repurchasing program to further enhance shareholder returns.

Going forward, Foot Locker, Inc. (NYSE:FL) management points investors to its recent $94 million acquisition of Runners Point, which will enhance the company’s position in Germany and provide additional expansion of its European business.

The Foolish bottom line

Buying stocks while they’re cheap is a great way to insulate yourself against market volatility. If you do some research into stocks that are trading for valuations below that of the broader market, you can provide yourself a margin of safety. Furthermore, if you focus on dividend-paying stocks, you can provide your portfolio an additional layer of stability through reliable quarterly returns.

You’re probably well aware of the market’s best-known dividend stocks, but you might not be aware of smaller dividend payers such as these. Each of these stocks trades for more attractive valuations than the S&P 500, which has a P/E of roughly 17, and these stocks provide investors with solid dividend yields. In addition, each of these companies is fairly well-known, and carries a brand name that is bigger than their market values might suggest.

Robert Ciura has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Robert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article These Small Stocks Are Both Value And Income Plays originally appeared on Fool.com is written by Robert Ciura.

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