Trading Signal 7

10 Discounted Stocks Endorsed By Analysts

Financial analysts use Price/Sales Ratio to measure whether a stock’s current market price is expensive or cheap. Some analysts believe that investors constantly acquiring stocks with low price/sales ratios will perform better than those buying stocks with low price/book value, price/ cash flow, or price/earnings ratios.

Advocates of P/S ratio analysis think it is good to use because it relates the popularity of a company’s stock to the volume of its business. Since sales are more difficult to manipulate as compared to net profit, P/S ratios are less subject to accounting gimmickry.

Sales are usually less unstable when compared with earnings or cash flow, so P/S ratios work particularly well on companies that face a temporary fall. When earnings drop, a stock’s price/earnings ratio may rise, but the effect on the P/S ratio is typically led by the stock’s price. In this article, we searched for stocks that have a low price-to-sales ratios (below 1) and reported high sales growth in last five years (above 25%). To find the best available, we only included stocks that have received recent analyst ratings of ‘Buy’ or better. There were 14 stocks that passed. However, there are good mid-cap and small-cap stocks. By eliminating the large-cap requirement, 10 stocks passed.

ARRIS Group, Inc. has a market cap of $4.07 billion; its shares were traded at around $27.67 with a P/E ratio of 30.74. The stock has P/S ratio of 0.75, which is lower than the industry’s P/S ratio of 2.01 and also below the wider technology sector P/S ratio of 4.55. The company had an annual average earnings growth of 18.70% over the past five years. The stock has grown revenues at an average 25.90% annual clip over the past five years. It has an analysts’ rating of 1.90.

Ciena Corporation offers good value relative to the wider industry, with it having a price to sales (P/S) ratio of 0.92, while the industry’s is higher at 1.72. Over the past five years the company has increased around 28.50% in sales annually, and is currently sitting on a market capitalization of $2.11 billion. Current analyst rating is 1.90.

C&J Energy Services, Inc., with a P/S ratio of 0.44, it seems to offer good value for the money while the wider oil & gas equipment & services industry has a P/S ratio of 21.17. As such, it could be worth buying right now. The company has grown revenues at an average 76.50% annual clip over the past five years. It has a Analysts’ Rating of 2.30.

Ascena Retail Group Inc has a price to earnings (P/S) ratio of 0.38, which is lower than the industry’s P/S ratio of 2.01. Furthermore, an excellent track record of increasing sales (it has risen at an annualized rate of 26.20% over the last five years). It has an analysts’ rating of 2.50.

Magnum Hunter Resources Corp.,while trading on a price to sales (P/S) ratio of just 0.93 (versus 1.30 for the wider oil & gas drilling & exploration industry), still seems to offer excellent value for money. The company’saverage annual sales growth is 89.10% over the past five years. Current analyst rating is 2.20.

MasTec, Inc shares are down 15.75% in 2015. With a reasonable P/S of 0.34 versus the industry’s average of 1.75, the stock is giving investors every reason to consider it a cheap stock. Its sales growth over the past 5 years is at 25.70% and it has a Analysts’ Rating of 1.30.

Northern Oil and Gas, Inc. trades at 4.94 times, trailing earnings and has a market cap of $382.28 million. It trades at a slightly lower P/S ratio (0.87) than the wider index, with the industry having a P/S ratio of 1.30 and 1.26 for the sector. Over the last five years, sales have jumped 139% annually.

Oasis Petroleum Inc. offers good value relative to the wider industry, with it having a price to sales (P/S) ratio of 0.92, while the industry’s is higher at 1.30. Over the past five years the company has increased around 101% in sales annually, and is currently sitting on a market capitalization of $1.31 billion.

Rock-Tenn Company, with a P/S ratio of 0.89, it seems to offer good value for the money while the wider packaging & containers industry has a P/S ratio of 1.09. As such, it could be worth buying right now. The company has grown revenues at an average 28.60% annual clip over the past five years.

Triangle Petroleum Corporation, while trading on a price to sales (P/S) ratio of just 0.78 (versus 1.30 for the wider independent oil & gas industry), still seems to offer excellent value for money. The company’saverage annual sales growth is 265% over the past five years.

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