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If you like to take a contrarian stance, then this may be an interesting starting point for your own analysis.

To construct this list we looked for stocks with these characteristics:
- Market cap above $300M
- Trading below its 20-,50-, and 200-day moving averages
- More profitable than its peers

In order to compare each company’s profitability we looked at the following metrics:
- Trailing twelve month gross margin
- Trailing twelve month operating margin
- Trailing twelve month pretax margin



We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.



Given the information above, can you tell the low hanging fruits apart from the falling knives?

1. Saul Centers Inc. (NYSE:BFS): REIT. Market cap of $774.70M. This stock is trading -2.11% below its 20-day MA, -2.72% below its 50-day MA, -4.31% above its 200-day MA. TTM gross margin at 46.38% vs. industry average at 37.58%. TTM operating margin at 46.38% vs. industry average at 36.6%. TTM pretax margin at 21.9% vs. industry average at 13.14%. The stock has gained 11.57% over the last year.

2. Choice Hotels International Inc. (NYSE:CHH):
Lodging Industry. Market cap of $2.13B. This stock is trading -5.57% below its 20-day MA, -6.76% below its 50-day MA, -3.97% above its 200-day MA. TTM gross margin at 44.26% vs. industry average at 36.27%. TTM operating margin at 27.16% vs. industry average at 18.19%. TTM pretax margin at 25.75% vs. industry average at 15.88%. The stock is a short squeeze candidate, with a short float at 13.17% (equivalent to 19.96 days of average volume). The stock has gained 4.81% over the last year.

3. Cisco Systems, Inc. (NASDAQ:CSCO):
Networking & Communication Devices Industry. Market cap of $91.99B. This stock is trading -3.43% below its 20-day MA, -3.95% below its 50-day MA, -17.19% above its 200-day MA. TTM gross margin at 66.42% vs. industry average at 56.26%. TTM operating margin at 20.32% vs. industry average at 14.9%. TTM pretax margin at 20.48% vs. industry average at 15.85%. .

4. DryShips, Inc. (NASDAQ:DRYS): Shipping Industry. Market cap of $1.49B. This stock is trading -11.68% below its 20-day MA, -13.94% below its 50-day MA, -16.63% above its 200-day MA. TTM gross margin at 73.41% vs. industry average at 61.88%. TTM operating margin at 40.49% vs. industry average at 34.45%. TTM pretax margin at 27.24% vs. industry average at 17.39%. This is a risky stock that is significantly more volatile than the overall market (beta = 3.34).

5. Employers Holdings, Inc. (NYSE:EIG):
Property & Casualty Insurance Industry. Market cap of $625.83M. This stock is trading -10.53% below its 20-day MA, -15.16% below its 50-day MA, -4.25% above its 200-day MA. TTM gross margin at 17.69% vs. industry average at 17.13%. TTM operating margin at 16.02% vs. industry average at 13.67%. TTM pretax margin at 13.58% vs. industry average at 11.97%. The stock has performed poorly over the last month, losing 16.73%.

6. Hollysys Automation Technologies, Ltd (NASDAQ:HOLI):
Industrial Electrical Equipment Industry. Market cap of $543.41M. This stock is trading -13.35% below its 20-day MA, -19.46% below its 50-day MA, -22.34% above its 200-day MA. TTM gross margin at 37.73% vs. industry average at 37.5%. TTM operating margin at 18.6% vs. industry average at 11.17%. TTM pretax margin at 20.65% vs. industry average at 13.71%. The stock is a short squeeze candidate, with a short float at 12.14% (equivalent to 8.66 days of average volume).

7. Interval Leisure Group, Inc. (NASDAQ:IILG): Business Services Industry. Market cap of $789.50M. This stock is trading -9.47% below its 20-day MA, -10.75% below its 50-day MA, -9.48% above its 200-day MA. TTM gross margin at 68.09% vs. industry average at 36.26%. TTM operating margin at 24.57% vs. industry average at 18.06%. TTM pretax margin at 15.74% vs. industry average at 15.71%.

8. Grand Canyon Education, Inc. (NASDAQ:LOPE): Education & Training Services Industry. Market cap of $602.02M. This stock is trading -5.75% below its 20-day MA, -7.86% below its 50-day MA, -25.77% above its 200-day MA. TTM gross margin at 64.59% vs. industry average at 52.99%. TTM operating margin at 20.73% vs. industry average at 19.8%. TTM pretax margin at 18.24% vs. industry average at 16.33%. The stock is a short squeeze candidate, with a short float at 6.86% (equivalent to 5.9 days of average volume).

9. MIPS Technologies Inc. (NASDAQ:MIPS):
Semiconductor Industry. Market cap of $402.46M. This stock is trading -11.06% below its 20-day MA, -20.9% below its 50-day MA, -31.69% above its 200-day MA. TTM gross margin at 82.15% vs. industry average at 58.84%. TTM operating margin at 30.39% vs. industry average at 25.15%. TTM pretax margin at 30.63% vs. industry average at 24.69%.

10. QLogic Corp. (NASDAQ:QLGC): Semiconductor Industry. Market cap of $1.77B. This stock is trading -3.76% below its 20-day MA, -3.55% below its 50-day MA, -1.49% above its 200-day MA. TTM gross margin at 70.84% vs. industry average at 40.3%. TTM operating margin at 23.53% vs. industry average at 20.67%. TTM pretax margin at 24.24% vs. industry average at 20.28%. It's been a rough couple of days for the stock, losing 5.39% over the last week.

11. S&T Bancorp Inc. (NASDAQ:STBA): Regional Banks Industry. Market cap of $524.44M. This stock is trading -4.26% below its 20-day MA, -9.09% below its 50-day MA, -7.16% above its 200-day MA. TTM gross margin at 69.58% vs. industry average at 69.17%. TTM operating margin at 39.32% vs. industry average at 37.32%. TTM pretax margin at 22.67% vs. industry average at 20.59%.The stock is a short squeeze candidate, with a short float at 9.22% (equivalent to 33.44 days of average volume).

12. Transmontaigne Partners L.P. (NYSE:TLP):
Oil & Gas Pipelines Industry. Market cap of $482.96M. This stock is trading -3.78% below its 20-day MA, -4.38% below its 50-day MA, -1.78% above its 200-day MA. TTM gross margin at 56.86% vs. industry average at 33.51%. TTM operating margin at 27.3% vs. industry average at 16.18%. TTM pretax margin at 19.03% vs. industry average at 15.92%.

13. USANA Health Sciences Inc. (NYSE:USNA):
Drug Related Products Industry. Market cap of $455.49M. This stock is trading -11.78% below its 20-day MA, -11.41% below its 50-day MA, -23.46% above its 200-day MA. TTM gross margin at 81.9% vs. industry average at 69.52%. TTM operating margin at 13.46% vs. industry average at 12.61%. TTM pretax margin at 13.16% vs. industry average at 9.29%. The stock is a short squeeze candidate, with a short float at 9.28% (equivalent to 7.28 days of average volume).

*Data sourced from Fidelity and FInviz.

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

Source: Contrarian Ideas: 13 Highly Profitable Stocks Stuck on a Downtrend