Alesco is an interesting stock in point. Prior to its recent profit downgrade, it looked 'cheap' on a PE of around 9.5 and a net dividend of 9.7%.
However if you rumage through previous years annual reports you will have noticed several warning signs.
Firstly it was using its higher PE ratio (prior to 2007) to fund acquisitions through a mixture of share script and debt (similar to ABC learning, but not as extreem). This resulted in net debt and shares outstanding increasing over the past 7 years by around 300%. A low interest rate environment increased return on equity even with a pretty poor return on capital of only around 10%
Secondly for the past 7 years the combination of capital expenditure per share + dividends has been higher than cashflow per share. Ok when the economy is going strong, but dangerous if we go into difficult times.
Thirdly whilst its a well run company, with a good integration of companies track record, the underlying businesses are mostly cyclical and have very limited barriers to entry. The company now facies a higher interest rate environment with tighter credit standards, a slowing national economy, and an environment with rising cost inputs coupled with limited ability to increase prices due to low economic moats around their subsidiaries.
Thus just because its PE was low and Yld high, didnt make it a screaming buy.