Seeking Alpha
Value, growth, long-term horizon, medium-term horizon
Profile| Send Message|
( followers)  

One way to gauge the profitability of a company is by comparing its profit margins to industry averages. Companies with higher margins are taking a greater percentage of revenues as profit, and they also have greater control of their cost structure.

We ran a screen on stocks trading under $5 for those that are highly profitable, beating their industry averages on gross, operating, and pretax margins.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six 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 companies are performing well? Use this list as a starting-off point for your own analysis.

List sorted by market cap.

1. Transportadora de Gas Del Sur S.A. (TGS): Engages in the transportation of natural gas, as well as production and commercialization of natural gas liquids primarily in Argentina. Market cap of $532.31M. TTM gross margin at 35.02% vs. industry gross margin at 22.07%. TTM operating margin at 22.22% vs. industry operating margin at 13.57%. TTM pretax margin at 18.39% vs. industry pretax margin at 11.19%. The stock is currently stuck in a downtrend, trading 9.17% below its SMA20, 10.74% below its SMA50, and 13.31% below its SMA200. It's been a rough couple of days for the stock, losing 6.16% over the last week.

2. TrustCo Bank Corp. NY (TRST): Operates as the holding company for Trustco Bank that provides various banking products and services to individuals, partnerships, and corporations. Market cap of $413.59M. TTM gross margin at 71.50% vs. industry gross margin at 61.51%. TTM operating margin at 41.85% vs. industry operating margin at 33.34%. TTM pretax margin at 25.43% vs. industry pretax margin at 14.07%. The stock has lost 14.45% over the last year.

3. Great Lakes Dredge & Dock Corporation (GLDD): Engages in the business of marine construction, primarily dredging, and commercial and industrial demolition principally in the east, west, and Gulf Coasts of the United States. Market cap of $267.50M. TTM gross margin at 21.36% vs. industry gross margin at 11.88%. TTM operating margin at 7.87% vs. industry operating margin at 5.11%. TTM pretax margin at 4.46% vs. industry pretax margin at 4.33%. The stock is a short-squeeze candidate, with a short float at 5.89% (equivalent to 5.8 days of average volume). The stock has lost 9.2% over the last year.

4. Pzena Investment Management, Inc (PZN): A publicly owned investment manager. The firm also provides investment advisory services to funds. Market cap of $254.41M. TTM gross margin at 53.05% vs. industry gross margin at 46.40%. TTM operating margin at 52.54% vs. industry operating margin at 35.82%. TTM pretax margin at 47.37% vs. industry pretax margin at 35.66%. This is a risky stock that is significantly more volatile than the overall market (beta = 2.72). The stock has performed poorly over the last month, losing 25.94%.

5. ChinaCast Education Corporation (OTCPK:CAST): Provides post-secondary education and e-learning services in China. Market cap of $215.07M. TTM gross margin at 65.33% vs. industry gross margin at 53.58%. TTM operating margin at 28.93% vs. industry operating margin at 21.76%. TTM pretax margin at 21.21% vs. industry pretax margin at 18.30%. Might be undervalued at current levels, with a PEG ratio at 0.65, and P/FCF ratio at 7.04. The stock is a short-squeeze candidate, with a short float at 12.45% (equivalent to 15.64 days of average volume). The stock has performed poorly over the last month, losing 12.2%.

6. LIN TV Corp. (TVL): Operates as a local television and digital media company that owns, operates, and services 32 television stations, and interactive television station and niche Websites in 17 U. Market cap of $150.05M. TTM gross margin at 64.41% vs. industry gross margin at 43.13%. TTM operating margin at 25.95% vs. industry operating margin at 16.17%. TTM pretax margin at 13.88% vs. industry pretax margin at 12.59%. This is a risky stock that is significantly more volatile than the overall market (beta = 3.08). It might be undervalued at current levels, with a PEG ratio at 0.67, and P/FCF ratio at 2.29. The stock has performed poorly over the last month, losing 21.53%.

7. China Nuokang Bio-Pharmaceutical Inc. (NKBP): Focuses on the research, development, manufacture, marketing, and sale of hospital-based medical products in China. Market cap of $102.36M. TTM gross margin at 87.80% vs. industry gross margin at 67.22%. TTM operating margin at 19.55% vs. industry operating margin at 14.01%. TTM pretax margin at 15.90% vs. industry pretax margin at 9.21%. The stock has had a couple of great days, gaining 5.62% over the last week.

8. SORL Auto Parts, Inc. (SORL): Engages in the development, manufacture, and distribution of automotive brake systems and other safety related auto parts for commercial vehicles, such as trucks and buses. Market cap of $70.83M. TTM gross margin at 30.93% vs. industry gross margin at 19.97%. TTM operating margin at 12.77% vs. industry operating margin at 7.79%. TTM pretax margin at 12.16% vs. industry pretax margin at 7.28%. The stock has had a couple of great days, gaining 7.31% over the last week.

9. LML Payment Systems Inc. (LMLP): Provides payment processing solutions primarily to businesses and organizations that use Internet to receive or send payments in Canada and the United States. Market cap of $68.03M. TTM gross margin at 51.30% vs. industry gross margin at 48.03%. TTM operating margin at 38.29% vs. industry operating margin at 26.34%. TTM pretax margin at 37.90% vs. industry pretax margin at 26.61%. The stock is currently stuck in a downtrend, trading 14.51% below its SMA20, 25.47% below its SMA50, and 31.91% below its SMA200. It's been a rough couple of days for the stock, losing 12.36% over the last week.

10. China Natural Gas, Inc. (OTC:CHNG): Engages in the distribution and sale of natural gas and gasoline to commercial, industrial, and residential customers in the Peoples' Republic of China. Market cap of $50.0M. TTM gross margin at 25.66% vs. industry gross margin at 22.07%. TTM operating margin at 18.40% vs. industry operating margin at 13.57%. TTM pretax margin at 19.30% vs. industry pretax margin at 11.19%. The stock is a short-squeeze candidate, with a short float at 5.99% (equivalent to 9.07 days of average volume). The stock has performed poorly over the last month, losing 15.88%.

Profitability data sourced from Fidelity; all other data sourced from Finviz.

Source: 10 Super Profitable Stocks Under $5