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Investing in the market always means taking on some type of risk, but that doesn't mean investors can't make that risk work harder for them. One way to do this is to make a short list of companies with strong top line growth that remain undervalued from a price-multiple perspective. While this won't do all the work for you, what it will do is let you focus on the right companies to review. After all, any company that is growing the top line in a weakened economy illustrates the potential to provide greater market returns when combined with a low price-multiple valuation and restrained future expectations.

We use the 1-Year Fiscal Revenue Growth Rate because it represents a firm’s growth over an extended period of time. This is one of many great metrics to use when trying to identify which firms are navigating the global economy well and generating positive growth trends.

The Price/Earnings ratio is one of the most commonly used price-multiple metrics. Often, EPS from the last four quarters is used to derive this number. A firm that has a high P/E ratio generally indicates that investors have high expectations of the firm relative to future earnings growth. By the opposite token, investors generally have lower expectations of a firm with a low P/E ratio. A firm that holds a P/E below 10 could be viewed as having "value investment" potential. One thing to remember is that EPS is an accounting measure that could be potentially manipulated. Thus, the P/E is only as good as the quality of the earnings.

We first looked for stocks that appear undervalued from a price-multiple perspective (P/E<10). From this narrowed list of candidates, we then looked for companies that clearly posted strong top line growth over the last year (1-year fiscal revenue growth>30%) and have outperformed the SandP 500 over the last 3 months. We did not screen out any sectors or market caps.

The list is ranked from highest to lowest by the 3 month return:

1. KLA-Tencor Corporation. (NASDAQ:KLAC)

Sector

Technology

Industry

Semiconductor Equipment and Materials

Market Cap

$7,877M

Beta

1.83

The company designs, manufactures, and markets process control and yield management solutions for the semiconductor and related nanoelectronics industries. KLAC has a P/E of 9.67 and a 1-year fiscal revenue growth rate of 74.39%. The company has gained 29.51% over the last three months. The short interest was 7.50% as of 10/14/2011.

2. SanDisk Corp. (NASDAQ:SNDK)

Sector

Technology

Industry

Semiconductor Memory

Market Cap

$12,059M

Beta

1.47

The company designs, develops, manufactures, and markets NAND-based flash data storage card products that are used in various consumer electronics products. SNDK has a P/E of 9.51 and a 1-year fiscal revenue growth rate of 35.33%. The company has gained 29.46% over the last three months. The short interest was 3.80% as of 10/14/2011.

3. ASML Holding NV. (NASDAQ:ASML)

Sector

Technology

Industry

Semiconductor Equipment and Materials

Market Cap

$18,192M

Beta

1.69

The company engages in the design, manufacture, market, and servicing of semiconductor processing equipment used in the fabrication of integrated circuits. ASML has a P/E of 8.39 and a 1-year fiscal revenue growth rate of 182.44%. The company has gained 27.55% over the last three months. The short interest was 1.50% as of 10/14/2011.

4. ASM International NV. (NASDAQ:ASMI)

Sector

Technology

Industry

Semiconductor Equipment and Materials

Market Cap

$1,624M

Beta

2.29

The company sells production systems and services for the production of semiconductor devices, or integrated circuits in Europe, North America, and Asia. ASMI has a P/E of 6.68 and a 1-year fiscal revenue growth rate of 107.01%. The company has gained 27.03% over the last three months. The short interest was 0.20% as of 10/14/2011.

5. Brooks Automation, Inc. (NASDAQ:BRKS)

Sector

Technology

Industry

Semiconductor Equipment and Materials

Market Cap

$724M

Beta

1.84

The company provides automation, vacuum, and instrumentation solutions to semiconductor manufacturing industry worldwide. BRKS has a P/E of 5.06 and a 1-year fiscal revenue growth rate of 171.13%. The company has gained 25.12% over the last three months. The short interest was 4.20% as of 10/14/2011.

6. Sunoco Logistics Partners. (NYSE:SXL)

Sector

Energy

Industry

Oil and Gas Midstream

Market Cap

$3,282M

Beta

0.07

The company engages in the transport, terminalling, and storage of refined products and crude oil, as well as the purchase and sale of crude oil in the United States. SXL has a P/E of 8.29 and a 1-year fiscal revenue growth rate of 44.35%. The company has gained 21.05% over the last three months. The short interest was 2.80% as of 10/14/2011.

7. Teradyne Inc. (NYSE:TER)

Sector

Technology

Industry

Semiconductor Equipment and Materials

Market Cap

$2,715M

Beta

1.94

The company provides automatic test equipment products and services worldwide. TER has a P/E of 9.08 and a 1-year fiscal revenue growth rate of 96.32%. The company has gained 20.8% over the last three months. The short interest was N/A as of 10/14/2011.

8. Avnet Inc. (NYSE:AVT)

Sector

Technology

Industry

Electronics Distribution

Market Cap

$4,644M

Beta

1.37

The company distributes electronic components, enterprise computer and storage products, and embedded subsystems. AVT has a P/E of 7.22 and a 1-year fiscal revenue growth rate of 38.49%. The company has gained 17.39% over the last three months. The short interest was 2.00% as of 10/14/2011.

9. Integrated Silicon Solution, I. (NASDAQ:ISSI)

Sector

Technology

Industry

Semiconductors

Market Cap

$253M

Beta

2.16

The company designs and markets integrated circuits for digital consumer electronics, networking and telecommunications, mobile communications, automotive electronics, and industrial markets. ISSI has a P/E of 8.05 and a 1-year fiscal revenue growth rate of 63.67%. The company has gained 17.32% over the last three months. The short interest was 5.90% as of 10/14/2011.

We hope this list helps as investors do their own due diligence and research on undervalued stocks with bullish momentum.

*Company profiles were sourced from Finviz.

Source: 9 Undervalued, Rallying Stocks With Impressive Top Line Growth