10 Cheap, Profitable Mid Caps Below The Investor Radar

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 |  Includes: DV, DWA, ERF, FBR, FSLR, IRF, KLAC, MTB, QLGC, STRA
by: Follow My Alpha

It's a simple reality that swimming against the tide in an ocean is useless because you just won't win, and in our opinion, the stock market is no different. Still, that doesn't mean investors can't use it to their advantage. A hyperbolic and choatic market environment offers investors more opportunities to take advantage of potential stock mispricing, so instead of seeing the glass half empty it's now half full.

The Price/Earnings ratio is a price valuation metric that focuses on a company’s twelve-month trailing earnings. It essentially provides a picture of how much an investor would pay for future earnings today, given that they do not fall below previous levels. While this may be a widely used valuation ratio, it’s always a great place to start when looking for potentially mispriced companies.

The Net Margin (TTM) is a profitability metric that lets an investor know how much of every dollar earned gets turned into a bottom line profit. A company that has illustrated the ability to hold a high net margin, and or expand it over time, will generally see its stock price increase due to the increasing profitability trend.

We ran a screen for mid cap stocks trading at a low valuation (P/E<12). From this narrowed list of candidates we then looked for companies that have illustrated strong bottom line numbers over the last twelve months (Net Margin>10). We did not screen out any sectors.

The list is ranked from highest to lowest by the P/E ratio:

1. M&T Bank Corp. (MTB)

Sector

Financial Services

Industry

Banks - Regional - US

Market Cap

$9,607M

Beta

1.03

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The company offers a variety of banking services for both institutional and retail clients. The company has a P/E ratio of 9.94. MTB has a Net Margin (TTM) of 25.06 %. The short interest was 4.00% as of 09/30/2011.

2. DeVry, Inc. (DV)

Sector

Consumer Defensive

Industry

Education & Training Services

Market Cap

$3,178M

Beta

0.42

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The company operates degree-granting higher education schools and a training programs. It has a P/E ratio of 9.92 and a Net Margin (TTM) of 15.14%. The short interest was 2.20% as of 09/30/2011.

3. QLogic Corporation. (QLGC)

Sector

Technology

Industry

Data Storage

Market Cap

$1,404M

Beta

1.41

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The company supplies storage network infrastructure solutions & networking solutions. It has a P/E ratio of 9.92 and a Net Margin (TTM) of 24.10%. The short interest was 5.20% as of 09/30/2011.

4. International Rectifier. (IRF)

Sector

Technology

Industry

Semiconductors

Market Cap

$1,614M

Beta

1.41

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The company designs and offers power management product devices, which employ semiconductors. It has a P/E ratio of 9.89 and a Net Margin (TTM) of 14.16%. The short interest was 2.00% as of 09/30/2011.

5. First Solar, Inc. (FSLR)

Sector

Technology

Industry

Solar

Market Cap

$5,001M

Beta

1.76

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The company designs and sells solar modules with proprietary thin film semiconductor technology. It has a P/E ratio of 9.88 and a Net Margin (TTM) of 20.33%. The short interest was 42.20% as of 09/30/2011.

6. Fibria Celulose SA. (FBR)

Sector

Basic Materials

Industry

Paper & Paper Products

Market Cap

$4,141M

Beta

2.95

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The company is a paper and pulp product company based in Brazil. It has a P/E ratio of 9.79 and a Net Margin (TTM) of 17.29 %. The short interest was N/A as of 09/30/2011.

7. KLA-Tencor Corporation. (KLAC)

Sector

Technology

Industry

Semiconductor Equipment & Materials

Market Cap

$7,485M

Beta

1.79

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The company offers control and yield management solutions for the semiconductor and other related spaces. It has a P/E ratio of 9.62 and a Net Margin (TTM) of 25.02%. The short interest was 6.50% as of 09/30/2011.

8. Dreamworks Animation SKG, Inc. (DWA)

Sector

Consumer Cyclical

Industry

Media - Diversified

Market Cap

$1,577M

Beta

1.20

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The company develops and produces animated films in a variety of media markets. It has a P/E ratio of 9.58 and a Net Margin (TTM) of 21.23%. The short interest was N/A as of 09/30/2011.

9. Enerplus Corp. (ERF)

Sector

Energy

Industry

Oil & Gas E&P

Market Cap

$5,028M

Beta

1.23

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The company is an energy investment trust that operates crude oil and natural gas properties. The company has a P/E ratio of 9.50 and a Net Margin (TTM) of 42.57 %. The short interest was N/A as of 09/30/2011.

10. Strayer Education, Inc. (STRA)

Sector

Consumer Cyclical

Industry

Education & Training Services

Market Cap

$1,098M

Beta

0.71

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The company offers a variety of academic programs through its subsidiaries. It has a P/E ratio of 9.40 and a Net Margin (TTM) of 19.02%. The short interest was 27.00% as of 09/30/2011.

We hope this list helps as investors look at profitable low valuation companys according to their P/E ratio.

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