8 Undervalued And Profitable Stocks With Encouraging Inventory Trends

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 |  Includes: CALL, CBPO, CHU, CLMT, GIII, NC, SMP, USNA
by: Kapitall

If you consider yourself a value investor, here are some ideas to get started on your stock search.

We ran a screen on stocks that have had positive performance over the last quarter for those that still appear undervalued, with PEG below 1 and P/FCF below 15. We then screened these names to find those with high growth projections, with 5-year projected EPS growth rates above 20%.

We further screened for stocks with strong sales trends by comparing growth in revenue to growth in inventory over the last year. We screened for stocks with positive sales trends, with faster growth in revenue than inventory over the last year. Since inventory represents the portion of goods not yet sold, faster growth in revenue than inventory is considered an encouraging sign.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below (CBPO and NC lacked sufficient data for this timeframe). Analyst ratings sourced from Zacks Investment Research.

Do you think these stocks are poised to move higher? Use this list as a starting point for your own analysis.

1. magicJack VocalTec Ltd. (NASDAQ:CALL): offers voice-over-Internet-protocol telephone services. Market cap at $328.19M, most recent closing price at $17.21. Revenue grew by 63.75% during the most recent quarter ($40.79M vs. $24.91M y/y). Inventory grew by -17.49% during the same time period ($6.65M vs. $8.06M y/y). Inventory, as a percentage of current assets, decreased from 12.88% to 11.39% during the most recent quarter (comparing 3 months ending 2012-09-30 to 3 months ending 2011-09-30). PEG at 0.83, Price/free cash flow at 5.81, and 5-year EPS growth at 17.5%.

2. China Biologic Products, Inc. (NASDAQ:CBPO): Engages in the research, development, manufacturing, and sale of plasma-based pharmaceutical products. Market cap at $380.48M, most recent closing price at $14.32. Revenue grew by 28.62% during the most recent quarter ($53.12M vs. $41.3M y/y). Inventory grew by 3.68% during the same time period ($68.24M vs. $65.82M y/y). Inventory, as a percentage of current assets, decreased from 38.27% to 30.51% during the most recent quarter (comparing 3 months ending 2012-09-30 to 3 months ending 2011-09-30). PEG at 0.31, Price/free cash flow at 7, and 5-year EPS growth at 30%.

3. China Unicom (Hong Kong) Limited (NYSE:CHU): Engages in the provision of GSM and WCDMA cellular, and related telecommunications services in the People's Republic of China. Market cap at $36.6B, most recent closing price at $15.53. Revenue grew by 16.44% during the most recent quarter ($63,502M vs. $54,538M y/y). Inventory grew by -2.37% during the same time period ($4,282M vs. $4,386M y/y). Inventory, as a percentage of current assets, decreased from 11.55% to 10.77% during the most recent quarter (comparing 3 months ending 2012-09-30 to 3 months ending 2011-09-30). PEG at 0.76, Price/Free cash flow at 3.28, and 5-year EPS growth at 57%.

4. Calumet Specialty Products Partners LP (NASDAQ:CLMT): Produces and sells specialty hydrocarbon products in North America. Market cap at $1.79B, most recent closing price at $31.04. Revenue grew by 51.69% during the most recent quarter ($1,179.82M vs. $777.78M y/y). Inventory grew by 10.66% during the same time period ($494.11M vs. $446.51M y/y). Inventory, as a percentage of current assets, decreased from 65.03% to 51.31% during the most recent quarter (comparing 3 months ending 2012-09-30 to 3 months ending 2011-09-30). PEG at 0.56, Price/Free cash flow at 10, and 5-year EPS growth at 17%.

5. G-III Apparel Group, Ltd. (NASDAQ:GIII): Designs, manufactures, imports, and markets a range of outerwear and sportswear apparel to retailers primarily in the United States. Market cap at $762.14M, most recent closing price at $38.05. Revenue grew by 9.35% during the most recent quarter ($251.48M vs. $229.97M y/y). Inventory grew by 4.34% during the same time period ($336.39M vs. $322.39M y/y). Inventory, as a percentage of current assets, decreased from 59.64% to 57.9% during the most recent quarter (comparing 3 months ending 2012-07-31 to 3 months ending 2011-07-31). PEG at 0.78, Price/Free cash flow at 10.80, and 5-year EPS growth at 20%.

6. Nacco Industries Inc. (NYSE:NC): Engages in lift trucks, small appliances, specialty retail, and mining businesses primarily in the Americas, Europe, and the Asia-Pacific. Market cap at $363.11M, most recent closing price at $53.32. Revenue grew by 7.97% during the most recent quarter ($210.1M vs. $194.6M y/y). Inventory grew by -62.01% during the same time period ($205.4M vs. $540.7M y/y). Inventory, as a percentage of current assets, decreased from 40.62% to 40.35% during the most recent quarter (comparing 3 months ending 2012-09-30 to 3 months ending 2011-09-30). PEG at 0.28, Price/free cash flow at 4.94, and 5-year EPS growth at 21.7%.

7. Standard Motor Products Inc. (NYSE:SMP): Distributes replacement parts for motor vehicles in the automotive aftermarket industry primarily in the United States, Canada, and Latin America. Market cap at $446.36M, most recent closing price at $19.56. Revenue grew by 16.83% during the most recent quarter ($275.98M vs. $236.22M y/y). Inventory grew by 5.25% during the same time period ($246.29M vs. $234M y/y). Inventory, as a percentage of current assets, decreased from 57.23% to 53.85% during the most recent quarter (comparing 3 months ending 2012-09-30 to 3 months ending 2011-09-30). PEG at 0.38, Price/free cash flow at 7.35, and 5-year EPS growth at 17.65%.

8. USANA Health Sciences Inc. (NYSE:USNA): Develops, manufactures, distributes, and sells nutritional and personal care products worldwide. Market cap at $595.67M, most recent closing price at $41.28. Revenue grew by 15.11% during the most recent quarter ($165.18M vs. $143.5M y/y). Inventory grew by -8.01% during the same time period ($33.3M vs. $36.2M y/y). Inventory, as a percentage of current assets, decreased from 40.23% to 24.02% during the most recent quarter (comparing 3 months ending 2012-09-29 to 3 months ending 2011-10-01). PEG at 0.64, Price/Free cash flow at 8.35, and 5-year EPS growth at 16%.

*Accounting data sourced from Google Finance, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: Business relationship disclosure: Kapitall is a team of analysts. This article was written by Sabina Bhatia, one of our writers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.