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One way to gauge profitability is by comparing a company’s margins with industry peers. Companies with higher margins have more control over their cost structure and are able to keep more sales as profits.

We ran a screen on stocks priced under $5 for those that are highly profitable, beating their industry peers on trailing-twelve-month gross, operating, and pretax margins.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

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.

Do you think these stocks have attractive operations? Use this list as a starting-off point for your own analysis.

List sorted by market cap.

1. DryShips, Inc. (DRYS): Shipping Industry. Market cap of $972.18M. Price at $2.75. TTM gross margin at 73.41% vs. industry gross margin at 57.76%. TTM operating margin at 40.49% vs. industry operating margin at 31.29%. TTM pretax margin at 27.24% vs. industry pretax margin at 18.91%. This is a risky stock that is significantly more volatile than the overall market (beta = 3.34). It's been a rough couple of days for the stock, losing 16.24% over the last week.

2. Transportadora de Gas Del Sur S.A. (TGS): Gas Utilities Industry. Market cap of $532.31M. Price at $3.59. TTM gross margin at 34.28% vs. industry gross margin at 22.84%. TTM operating margin at 21.47% vs. industry operating margin at 14.02%. TTM pretax margin at 12.18% vs. industry pretax margin at 11.58%. The stock has performed poorly over the last month, losing 12.07%.

3. TrustCo Bank Corp. NY (TRST): Regional Banks Industry. Market cap of $327.03M. Price at $4.20. TTM gross margin at 71.50% vs. industry gross margin at 60.05%. TTM operating margin at 42.53% vs. industry operating margin at 32.20%. TTM pretax margin at 25.43% vs. industry pretax margin at 13.21%. It's been a rough couple of days for the stock, losing 5.78% over the last week.

*Profitability margins sourced from Fidelity, all other data sourced from Finviz.

Source: 3 Stocks Under $5 With Impressive Profitability