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By looking at average industry and sector valuation measures, and stacking issues up in a logical comparison module, it is often easy to spot anomalies. This includes finding stocks that look way undervalued in relation to peers. The Internet Service Providers industry, by our measure, is potentially the most overvalued industry in the Technology sector right now.

Of the five listed issues currently in this industry, one stock looks extremely undervalued compared to all the others. The stock is also at a 12 and a half year high, indicating it may have some momentum while still being under-appreciated, rather than being undervalued for good reason. See if you can find the valuation anomaly for further scrutiny.

Qihoo 360 Technology Co. Ltd (NYSE:QIHU)

Qihoo is a Chinese company with a market cap just north of $3.9 Billion. QIHU has 122 million shares outstanding on the NYSE trading for around $32 a piece. In the trailing twelve months, the company has earned $0.39 per share on a profit margin of 18%. The stock has a P/E of 82, forward P/E of 29, a PEG of 1.82, Price to Sales of 13.7, Price to Book of 8.43, Price to Free Cash Flow of 90, Enterprise Value to Sales of 12.5 and a current ratio of 6.32. The stock gets an Extreme Value Score (EVS), which is computed using these and other valuation measures, of 8.7, where 10 is the most overvalued, and 0 is the most undervalued.

Trulia, Inc. (NYSE:TRLA)

Trulia is a U.S. company with a market cap just north of $800 Million. TRLA has 27 million shares outstanding on the NYSE trading for around $30 a piece. In the trailing twelve months, the company has lost $0.62 per share on a profit margin of -16%. The stock has a forward P/E of 40, Price to Sales of 11.8, Price to Book of 9.35, Enterprise Value to Sales of 10.5 and a current ratio of 4.32. The stock gets an EVS of 7.7.

Vipshop Holdings Limited (NYSE:VIPS)

Vipshop is a Chinese company with a market cap just under 1.2 Billion. VIPS has 50.7 million shares outstanding on the NYSE trading for around $25 a piece. In the trailing twelve months, the company has lost $1.62 per share on a profit margin of -16%. The stock has a forward P/E of 32.2, Price to Sales of 2.41, Price to Book of 16.26, Enterprise Value to Sales of 2.14 and a current ratio of 1.34. The stock gets an EVS of 7.3.

Sify Technologies Limited (NASDAQ:SIFY)

Sify is an Indian company with a market cap just north of $350 Million. SIFY has 178.5 million shares outstanding on the NASDAQ trading for around $2 a piece. In the trailing twelve months, the company has lost $0.07 per share. The stock has Price to Sales of 2.34, Price to Book of 4.08, Price to cash of 22.3, Enterprise Value to Sales of 2.24 and a current ratio of 1.22. The stock gets an EVS of 7.1.

Internet Initiative Japan Inc. (NASDAQ:IIJI)

Internet Initiative Japan is a Japanese company with a market cap of $1.16 Billion. IIJI has 81 million shares outstanding trading on the NASDAQ for around $15 a piece. In the trailing twelve months, the company has earned $2.30 per share on a profit margin of 4%. The stock has a P/E of 6.2, a PEG of 0.2, Price to Sales of 1.05, Price to Book of 0.77, Price to Free Cash Flow of 25.8, Enterprise Value to Sales of 1.13 and a current ratio of 1.15. The stock gets an EVS of 4.7. Have you figured out which one is the black sheep yet?

In addition to trading at the highest levels seen in more than a decade, Internet Initiative Japan has the lowest short interest of the five stocks in this group, and also has the lowest volatility. These things could go a long way towards alleviating some risk associated with the stocks meager trading activity, as it is the least heavily traded in the group. The light trading volume coupled with almost no short interest seems to help bolster our under-appreciated theory. The company recently increased its dividend, which usually doesn't have much of a "value trap" ring to it either.

IIJI may be a unique value play that is just starting to catch up with its peers from a valuation standpoint, with a lot of room for the stock to move higher. This play may also be unique in that you don't necessarily need to wait for a big pullback or try to pick a bottom, as the bottom may be creeping up right along with the price.

Source: Bucking The Trend: One Undervalued Stock In An Extremely Overvalued Industry