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Accounts receivable is a big part of revenue for many companies, but it is also a potential source of problems.

Receivables represent money earned but not yet collected, so when receivables become a larger part of the revenue reported by a company, it indicates lower quality revenues. This is because there is no guarantee that the money will be paid back in full.

We ran a screen on stocks from the retail industry that appear undervalued to earnings growth, with PEG below 1. We screened for those that have seen positive trends in their accounts receivable, with increases in quarterly revenue year-over-year outpacing changes in quarterly accounts receivable. We also screened for companies that have seen a decrease in accounts receivable as a percent of current assets year-over-year.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the 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 have healthy revenues? Use this list as a starting-off point for your own analysis.

List sorted by PEG.

1. Perry Ellis International Inc. (NASDAQ:PERY): Engages in designing, sourcing, marketing, and licensing apparel products for men and women in the United States and internationally. Market cap of $337.02M. PEG at 0.58. MRQ revenue has increased 32.57% ($214.44M vs. $161.75M y/y) while MRQ accounts receivable has increased 29.16% ($110.2M vs. $85.32M y/y). Accounts receivable/current assets has decreased from 31.30% to 28.20%, comparing 3 months ending 2011-07-30 to 3 months ending 2010-07-31. This is a risky stock that is significantly more volatile than the overall market (beta = 2.08). The stock is a short squeeze candidate, with a short float at 13.19% (equivalent to 9.69 days of average volume). The stock has had a good month, gaining 14.25%.

2. Iconix Brand Group, Inc. (NASDAQ:ICON): Operates as a brand management company that engages in licensing, marketing, and providing trend direction for a portfolio of owned consumer brands. Market cap of $1.34B. PEG at 0.62. MRQ revenue has increased 17.47% ($89.29M vs. $76.01M y/y) while MRQ accounts receivable has decreased 3.44% ($66.15M vs. $68.51M y/y). Accounts receivable/current assets has decreased from 44.27% to 20.18%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. The stock is a short squeeze candidate, with a short float at 12.3% (equivalent to 11.75 days of average volume). The stock has gained 5.22% over the last year.

3. United Online, Inc. (NASDAQ:UNTD):
Provides consumer products and services over the Internet, primarily in the United States and internationally. Market cap of $493.12M. PEG at 0.63. MRQ revenue has increased 5.30% ($255.56M vs. $242.69M y/y) while MRQ accounts receivable has decreased 4.15% ($40.19M vs. $41.93M y/y). Accounts receivable/current assets has decreased from 24.38% to 21.34%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. The stock is a short squeeze candidate, with a short float at 7.45% (equivalent to 8.18 days of average volume). The stock has had a good month, gaining 13.01%.

4. Warnaco Group Inc. (NYSE:WRC):
Designs, sources, markets, licenses, and distributes a range of intimate apparel, sportswear, and swimwear worldwide. Market cap of $2.24B. PEG at 0.92. MRQ revenue has increased 13.88% ($591.39M vs. $519.33M y/y) while MRQ accounts receivable has increased 5.29% ($320.42M vs. $304.33M y/y). Accounts receivable/current assets has decreased from 33.77% to 28.18%, comparing 3 months ending 2011-07-02 to 3 months ending 2010-07-03. The stock has had a good month, gaining 12.2%.

5. CROCS Inc. (NASDAQ:CROX):
Engages in the design, development, manufacture, marketing, and distribution of footwear, apparel, and accessories for men, women, and children. Market cap of $2.56B. PEG at 0.97. MRQ revenue has increased 29.61% ($295.58M vs. $228.05M y/y) while MRQ accounts receivable has increased 22.57% ($143.4M vs. $116.99M y/y). Accounts receivable/current assets has decreased from 33.44% to 27.90%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. The stock has had a couple of great days, gaining 11.47% over the last week.

6. EZCORP Inc. (NASDAQ:EZPW): Provides credit services to people who lack the cash or access to credit to meet short-term needs. Market cap of $1.67B. PEG at 0.98. MRQ revenue has increased 17.06% ($203.15M vs. $173.54M y/y) while MRQ accounts receivable has increased 13.31% ($183.43M vs. $161.88M y/y). Accounts receivable/current assets has decreased from 60.21% to 55.92%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. The stock has had a good month, gaining 12.76%.

*Accounting data sourced from Google Finance, all other data sourced from Finviz.

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

Source: 6 Undervalued Retail Stocks With Positive Receivable Trends