Low multiples such as earnings multiples or book multiples generally represent good values. While this may not be always true, it is true enough that they make for a great screen to shortlist stocks for further review. In this screen we go after the traditional trifecta of low price/book, low price/earnings and low price/sales. At the same time, we are look for some history of sales and earnings growth.
This gives us a good shortlist of stocks from which we can further narrow down our focus by quick review of other fundamental data.
Additionally, I have filtered out small banks and other financial stocks from this list to leave us with tangible operating businesses.
This screen looks for small cap stocks between $30 million and $2 Billion in market capitalization with low multiples:
- P/E ratio between 2 and 10
- P/B ratio < 1.5
- P/S ratio < 2
- 5 year EPS growth rate > 2%
- 5 year Sales growth rate > 2%
The stocks are limited to those listed on US exchanges.
The Screen Results
EPS 5 yr growth
Sales 5 yr growth
Notes and Observations
Food/Grocery stocks are predominant in this screen after you remove the financials. Seneca Foods has had a great year as is expected of a packaged food company during the pandemic. SpartanNash also offers a great dividend yield of 4.1%. All 3 stocks appear to be great values and I am adding them over to my list for further review.
We have 3 stocks from the list to review further. Please keep an eye on your mailbox as I will start publishing my reviews now as I complete them.