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The U.S. economy just posted sound growth numbers despite high unemployment but not everyone is buying the story in relation to certain companies. In our view anytime there is some hyper bias toward the bullish or bearish spectrum it's time to start looking at the details of the firm to see if there is any opportunity. Right now in our view this is a great time to review mid cap companies with strong profitability and bare bone valuations because expectations are so low any type of improvement could turn the stock around on a dime.

The Price/Earnings ratio is a "bread and butter" price-multiple valuation that uses trailing earnings to determine whether a firm is appears under or overvalued. While this metric may have backward indicating components it does provide insight into the investment community's expectations of a company moving forward. A firm that has a P/E ratio below ten is generally considered to have entered technical "value investment" ground.

Now the 1-year fiscal EPS growth rate lets investors know whether the bottom line is declining, holding, or growing over an extended period of time. The reason we use the 1-year period is because it takes into account multiple quarters and various economic environments. This helps average out any one particular all-star quarter highlight and provides focus on the extended trend. In theory an increase in this metric should equate to a higher stock price over time because it correlates with a firms overall profitability and retained earnings.

We first looked for mid cap stocks that have low price-multiple valuations (P/E<10). From this narrowed pool we looked for firms that have substantially grown the bottom line (1-year fiscal EPS growth rate>30%). We did not screen out any companies by sector.

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

1. Healthsouth Corp. (HLS)

Sector

Healthcare

Industry

Medical Care

Market Cap

$1,653M

Beta

1.70

The firm provides rehabilitative health care and ambulatory surgery services. The company’s P/E ratio is 2.10. HLS’s 1-year fiscal EPS growth rate is 990.79%. The short interest was 9.00% as of 09/30/2011.

2. Triquint Semiconductor. (TQNT)

Sector

Technology

Industry

Semiconductors

Market Cap

$1,134M

Beta

2.04

The firm supplies high performance modules, components, and services for communications applications. The company’s P/E ratio is 6.36. TQNT’s 1-year fiscal EPS growth rate is 963.64%. The short interest was 6.70% as of 09/30/2011.

3. Bunge Ltd. (BG)

Sector

Consumer Defensive

Industry

Farm Products

Market Cap

$8,576M

Beta

1.05

The firm is an integrated agribusiness and food company. The company’s P/E ratio is 8.52. BG’s 1-year fiscal EPS growth rate is 578.38%. The short interest was 2.70% as of 09/30/2011.

4. Liberty Media Corporation. (LCAPA)

Sector

Consumer Cyclical

Industry

Media - Diversified

Market Cap

$6,222M

Beta

2.42

The firm operates within multiple entertainment spaces across the world. The company’s P/E ratio is 5.64. LCAPA’s 1-year fiscal EPS growth rate is 568.70%. The short interest was 1.00% as of 09/30/2011.

5. HollyFrontier Corp. (HFC)

Sector

Energy

Industry

Oil & Gas Refining & Marketing

Market Cap

$6,010M

Beta

0.75

The firm is an independent petroleum refiner that produces gasoline, diesel fuel and jet fuel. The company’s P/E ratio is 8.97. HFC’s 1-year fiscal EPS growth rate is 546.67 %. The short interest was 10.10% as of 09/30/2011.

6. United Microelectronics Corp. (UMC)

Sector

Technology

Industry

Semiconductors

Market Cap

$5,559M

Beta

1.04

The firm makes semiconductors for 3rd parties. The company’s P/E ratio is 7.26. UMC’s 1-year fiscal EPS growth rate is 523.33%. The short interest was N/A as of 09/30/2011.

7. Constellation Brands Inc. (STZ)

Sector

Consumer Defensive

Industry

Beverages - Wineries & Distilleries

Market Cap

$4,006M

Beta

1.06

The firm produces and sells a variety of alcoholic beverages. The company’s P/E ratio is 5.63. STZ’s 1-year fiscal EPS growth rate is 482.22%. The short interest was 2.60% as of 09/30/2011.

8. Tenet Healthcare Corp. (THC)

Sector

Healthcare

Industry

Medical Care

Market Cap

$2,410M

Beta

2.85

The Company operates in one line of business-the provision of health care services, primarily through the operation of general hospitals which are conducted through its subsidiaries. The company’s P/E ratio is 2.53. THC’s 1-year fiscal EPS growth rate is 367.44 %. The short interest was 10.40% as of 09/30/2011.

9. KKR Financial Corporation. (KFN)

Sector

Financial Services

Industry

Asset Management

Market Cap

$1,432M

Beta

3.01

The firm specializes in uses leverage to generate competitive risk-adjusted returns as an LBO company. The company’s P/E ratio is 3.80. KFN’s 1-year fiscal EPS growth rate is 364.00%. The short interest was 4.20% as of 09/30/2011.

10. Cliffs Natural Resources Inc. (CLF)

Sector

Basic Matls

Industry

Steel

Market Cap

$8,822M

Beta

2.45

The firm produces and sells of iron ore pellets in the United States and Canada. The company’s P/E ratio is 5.48. CLF’s 1-year fiscal EPS growth rate is 359.51%. The short interest was N/A as of 09/30/2011.

We hope this list helps as investors do their own due diligence and research on low valuation and profitable mid cap companies.

Source: 10 Oversold Stocks Holding Low Valuations And Explosive Profitability