Introduction
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.
Screen Details
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
Stock | Company | P/E Ratio | P/B Ratio | P/S ratio | EPS 5 yr growth | Sales 5 yr growth |
|---|---|---|---|---|---|---|
AAWW | Atlas Air Worldwide Hldgs | 5.9 | 0.3 | 0.3 | 7.8% | 9.1% |
ACCO | ACCO Brands | 9.8 | 1.2 | 0.5 | 3.0% | 2.4% |
BBAR | BBVA Argentina | 4.9 | 0.7 | 0.6 | 48.1% | 48.1% |
BBGI | Beasley Broadcast Group | 7.6 | 0.3 | 0.3 | 26.4% | 36.8% |
BGS | B&G Foods | 6.0 | 1.2 | 0.6 | 24.7% | 14.9% |
CAI | CAI International | 8.1 | 0.7 | 0.9 | 3.5% | 14.5% |
CFFI | C&F International | 10.0 | 1.1 | 1.7 | 7.5% | 2.4% |
CMCM | Cheetah Mobile | 3.2 | 0.6 | 0.7 | 65.6% | 27.1% |
CPE | Callon Petroleum | 4.0 | 0.4 | 1.5 | 25.8% | 35.4% |
CSIQ | Canadian Solar | 4.1 | 0.7 | 0.3 | 2.9% | 4.8% |
ECPG | Encore Capital Group | 6.6 | 1.2 | 0.8 | 8.4% | 6.2% |
FLY | FLY Leasing | 3.4 | 0.8 | 1.4 | 49.1% | 4.1% |
FONR | Fonar | 9.1 | 1.1 | 1.5 | 6.9% | 4.6% |
GTS | Triple-S Management | 6.1 | 0.5 | 0.1 | 17.0% | 6.8% |
HA | Hawaiian Holdings | 7.1 | 1.3 | 0.5 | 29.1% | 4.4% |
HOFT | Hooker Furniture | 9.3 | 1.1 | 0.4 | 21.6% | 22.7% |
KRA | Kraton | 8.3 | 0.9 | 0.4 | 30.5% | 8.2% |
MIK | Michaels Companies | 4.4 | - | 0.3 | 50.0% | 2.1% |
MOV | Movado Group | 8.6 | 1.1 | 0.8 | 8.0% | 4.0% |
MRLN | Marlin Business Services | 9.8 | 1.2 | 1.8 | 7.8%% | 9.9% |
MTDR | Matador Resources | 8.2 | 0.9 | 1.8 | 8.5% | 21.9% |
NAII | Natural Alternatives Int | 9.7 | 0.8 | 0.5 | 21.3% | 12.9% |
REI | Ring Energy | 5.5 | 0.3 | 0.8 | 3.5% | 38.8% |
RM | Regional Management | 9.9 | 1.2 | 1.3 | 17.0% | 10.4% |
SORL | SORL Auto Parts | 5.2 | 0.3 | 0.1 | 2.8% | 17.2% |
SRCI | SRC Energy | 4.5 | 0.6 | 1.4 | 18.9% | 45.3% |
TGS | Transportadora de Gas | 4.1 | 1.5 | 1.7 | 157.1% | 58.3% |
UBOH | United Bancshares | 7.7 | 0.8 | 1.7 | 16.5% | 14.0% |
WLFC | Willis Lease Finance | 4.8 | 1.0 | 0.8 | 49.0% | 20.1% |
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Notes and Observations
I am not favoring the financial and energy sectors yet. Of the remaining, I find the following stocks interesting:
- BGS: B&G Foods came out with a reduced guidance and the stock has slid hitting 52 week lows recently. The company stock now yields about 12% with the dividend payout ratio of 70%. From all other measures, the stock appears to be severely undervalued. Will proceed with detailed review.
- HOFT: Is already in the review list from other screens
- MOV: Great valuation and dividend yield of 3.3%. The company is in luxury watches segment, which is a consumer cyclical sector. However, a recession may not affect it as much due to its luxury focus. Will review further.
Ending Note
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.
