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Using the Price/Book Ratio is a classic way to identify potentially mispriced stocks. The ratio is calculated by dividing the current stock price by the book value per share. If the P/BV Ratio is less than 1 it is said to be trading below its “Break Up” value. A low ratio number could indicate a potential opportunity or warning that something is fundamentally wrong with the company.

Earnings Per Share Growth (1-Fiscal Year) provides a more stable picture of earnings growth over time. As well, it helps indentify companies whose profitability is increasing or decreasing. EPS is generally a key driver for a company’s share price.

We ran a screen for companies with a Price/Book Value of less than 1 that have underperformed the S&P 500 (SPY) in the last week. From this narrowed pool we then screened for companies that had grown their EPS over the last fiscal year (X>10%).

The Price/Book Value Ratio ranks the list from highest lowest:

1. International Speedway Corporation (ISCA)

Sector

Consumer Cycle

Industry

Leisure

Market Cap

$1,053M

Beta

1.14

The company is the lead promoter of motor sport entertainment. The P/BV Ratio is 0.88. In the last week ISCA declined -2.60%. The EPS Growth Rate is 707.14%. The short interest is N/A as of 08/15/2011.

2. United Microelectronics Corp. (UMC)

Sector

Technology

Industry

Semiconductors

Market Cap

$4,736M

Beta

1.10

The company develops and sells semiconductors. The P/BV Ratio is 0.63. In the last week UMC declined -2.58%. The EPS Growth Rate is 523.33%. The short interest is N/A as of 08/15/2011.

3. Trina Solar Limited (TSL)

Sector

Technology

Industry

Solar

Market Cap

$827M

Beta

2.99

The company offers integrated solar-power products that are manufactured in China. The P/BV Ratio is 0.67. In the last week TSL declined -22.26%. The EPS Growth Rate is 433.33%. The short interest is N/A as of 08/15/2011.

4. RailAmerica Inc. (RA)

Sector

Industrials

Industry

Railroads

Market Cap

$641M

Beta

N/A

The firm's P/BV Ratio is 0.94. In the last week RA declined -3.38%. The EPS Growth Rate is 400.00%. The short interest is 6.60% as of 08/15/2011.

5. Southwest Airlines Co (LUV)

Sector

Industrials

Industry

Airlines

Market Cap

$6,480M

Beta

1.38

The company is a low-fare airline operator. The P/BV Ratio is 0.90. In the last week LUV declined -2.30%. The EPS Growth Rate is 369.23%. The short interest is 3.40% as of 08/15/2011.

6. SunPower Corporation (SPWRA)

Sector

Technology

Industry

Solar

Market Cap

$1,182M

Beta

1.87

The company develops and sells solar electric power products. The P/BV Ratio is 0.79. In the last week SPWRA declined -7.44%. The EPS Growth Rate is 368.57%. The short interest is N/A as of 08/15/2011.

7. Healthways, Inc. (HWAY)

Sector

Healthcare

Industry

Medical Care

Market Cap

$384M

Beta

1.59

The company offers specialized Health and Care Support programs and services. The P/BV Ratio is 0.87. In the last week HWAY declined -2.90%. The EPS Growth Rate is 353.33%. The short interest is 8.80% as of 08/15/2011.

8. Brookfield Office Properties (BPO)

Sector

Real Estate

Industry

Real Estate Services

Market Cap

$7,980M

Beta

1.97

The company develops and manages commercial properties all over North America. The P/BV Ratio is 0.91. In the last week BPO declined -3.53%. The EPS Growth Rate is 343.86%. The short interest is N/A as of 08/15/2011.

9. Assured Guaranty Ltd (AGO)

Sector

Financial Services

Industry

Insurance - Specialty

Market Cap

$2,091M

Beta

2.53


The P/BV Ratio is 0.53. In the last week AGO declined -10.35%. The EPS Growth Rate is 286.67%. The short interest is 4.70% as of 08/15/2011.

10. Brown Shoe Company, Inc. (BWS)

Sector

Consumer Cyclical

Industry

Footwear & Accessories

Market Cap

$296M

Beta

2.20


The company operates retail shore stores. The P/BV Ratio is 0.76. In the last week BWS declined -4.99%. The EPS Growth Rate is 286.36%. The short interest is 23.70% as of 08/15/2011. Given the high short interest this could be a short favorite or potentially a great short squeeze.

We hope this list helps as investors due their own due diligence on companies trading below Price/Book Value and growing their Earnings Per Share.

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

Source: 10 Cheap Stocks With Bearish Trends Despite Growth Profitability