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Looking for potentially undervalued stocks but don’t know where to start? Here are a few ideas to get you started. We ran a screen on technically oversold stocks, with RSI (14) below 40. We screened these stocks for those with impressive profitability, beating their industry peers on gross, operating, and pretax margins over the trailing twelve months.

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.


Do you think these stocks should be trading higher? Use this list as a starting point for your own analysis.

List sorted by gross margin difference.

1. Noah Holdings Limited (NYSE:NOAH): Engages in the distribution of wealth management products to the high-net-worth population in China. Market cap of $365.16M. RSI(14) at 28.21. TTM gross margin at 78.87% vs. industry gross margin at 45.23%. TTM operating margin at 46.62% vs. industry operating margin at 35.80%. TTM pretax margin at 47.26% vs. industry pretax margin at 25.21%. The stock is a short squeeze candidate, with a short float at 18.24% (equivalent to 28.58 days of average volume). It's been a rough couple of days for the stock, losing 5.48% over the last week.

2. Yongye International, Inc. (NASDAQ:YONG): Engages in the research, development, manufacture, and sale of fulvic acid based liquid and powder nutrient compounds for plants and animals, which are used in the agriculture industry in the People's Republic of China. Market cap of $189.02M. RSI(14) at 36.61. TTM gross margin at 59.98% vs. industry gross margin at 37.71%. TTM operating margin at 31.30% vs. industry operating margin at 17.45%. TTM pretax margin at 31.62% vs. industry pretax margin at 16.52%. The stock is a short squeeze candidate, with a short float at 9.76% (equivalent to 12.77 days of average volume). The stock has performed poorly over the last month, losing 12.41%.

3. Hasbro Inc. (NASDAQ:HAS): Engages in the design, manufacture, and marketing of games and toys. Market cap of $4.15B. RSI(14) at 31.86. TTM gross margin at 59.68% vs. industry gross margin at 45.09%. TTM operating margin at 14.01% vs. industry operating margin at 11.53%. TTM pretax margin at 11.11% vs. industry pretax margin at 9.31%. Offers a good dividend, and appears to have good liquidity to back it up--dividend yield at 3.73%, current ratio at 2.35, and quick ratio at 1.79. The stock has lost 30.33% over the last year.

4. Crown Media Holdings Inc. (NASDAQ:CRWN): Through its subsidiary, Crown Media United States, LLC, owns and operates pay television channels in the United States and Puerto Rico. Market cap of $417.23M. RSI(14) at 37.44. TTM gross margin at 53.37% vs. industry gross margin at 42.10%. TTM operating margin at 33.27% vs. industry operating margin at 18.55%. TTM pretax margin at 28.37% vs. industry pretax margin at 14.28%. The stock is a short squeeze candidate, with a short float at 14.84% (equivalent to 44.38 days of average volume). The stock has lost 55.56% over the last year.

5. QEP Co. Inc. (OTCPK:QEPC): Distributes a range of hardwood flooring, flooring installation tools, adhesives, and flooring related products targeted for the professional installation and do-it-yourself markets. Market cap of $61.42M. RSI(14) at 38.17. TTM gross margin at 32.25% vs. industry gross margin at 27.18%. TTM operating margin at 7.33% vs. industry operating margin at 5.84%. TTM pretax margin at 6.60% vs. industry pretax margin at 3.44%. This is a risky stock that is significantly more volatile than the overall market (beta = 2.36). It's been a rough couple of days for the stock, losing 9.33% over the last week.

6. Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR): Engages in the specialty coffee and coffee maker business. Market cap of $7.01B. RSI(14) at 37.64. TTM gross margin at 38.41% vs. industry gross margin at 32.45%. TTM operating margin at 14.61% vs. industry operating margin at 11.84%. TTM pretax margin at 11.42% vs. industry pretax margin at 9.31%. The stock has gained 41.9% over the last year.

7. Weight Watchers International, Inc. (NYSE:WTW): Provides weight management services worldwide. Market cap of $4.20B. RSI(14) at 37.67. TTM gross margin at 58.63% vs. industry gross margin at 52.44%. TTM operating margin at 29.62% vs. industry operating margin at 21.39%. TTM pretax margin at 25.92% vs. industry pretax margin at 18.57%. The stock is a short squeeze candidate, with a short float at 18.56% (equivalent to 5.7 days of average volume). The stock has gained 54.43% over the last year.

8. Bed Bath & Beyond Inc. (NASDAQ:BBBY): Operates a chain of retail stores. Market cap of $14.10B. RSI(14) at 35.96. TTM gross margin at 41.45% vs. industry gross margin at 37.95%. TTM operating margin at 15.95% vs. industry operating margin at 9.99%. TTM pretax margin at 15.94% vs. industry pretax margin at 9.33%. It's been a rough couple of days for the stock, losing 5.01% over the last week.

9. Artio Global Investors Inc. (NYSE:ART): A publicly owned asset management holding company. Market cap of $302.17M. RSI(14) at 34.69. TTM gross margin at 49.32% vs. industry gross margin at 45.23%. TTM operating margin at 48.43% vs. industry operating margin at 35.80%. TTM pretax margin at 44.24% vs. industry pretax margin at 25.21%. The stock is a short squeeze candidate, with a short float at 7.84% (equivalent to 8.99 days of average volume). The stock has lost 64.71% over the last year.

10. Vera Bradley, Inc. (NASDAQ:VRA): Engages in the design, production, marketing, and retail of functional accessories for women under the “Vera Bradley"" brand. Market cap of $1.30B. RSI(14) at 32.47. TTM gross margin at 58.02% vs. industry gross margin at 53.48%. TTM operating margin at 18.79% vs. industry operating margin at 16.22%. TTM pretax margin at 20.36% vs. industry pretax margin at 15.18%. The stock is a short squeeze candidate, with a short float at 52.42% (equivalent to 15.8 days of average volume). The stock has lost 1.38% over the last year.

11. Masimo Corporation (NASDAQ:MASI): Develops, manufactures, and markets noninvasive patient monitoring products worldwide. Market cap of $1.09B. RSI(14) at 36.75. TTM gross margin at 69.89% vs. industry gross margin at 65.77%. TTM operating margin at 20.62% vs. industry operating margin at 15.03%. TTM pretax margin at 20.52% vs. industry pretax margin at 11.63%. The stock is a short squeeze candidate, with a short float at 8.86% (equivalent to 8.34 days of average volume). The stock has lost 39.18% over the last year.

12. China Green Agriculture, Inc. (NYSE:CGA): Engages in the research, development, manufacture, distribution, and sale of humic acid based compound fertilizers in China. Market cap of $75.97M. RSI(14) at 30.34. TTM gross margin at 39.14% vs. industry gross margin at 37.71%. TTM operating margin at 23.70% vs. industry operating margin at 17.45%. TTM pretax margin at 23.61% vs. industry pretax margin at 16.52%. The stock is a short squeeze candidate, with a short float at 10.45% (equivalent to 11.78 days of average volume). It's been a rough couple of days for the stock, losing 5.69% over the last week.

13. Hollysys Automation Technologies, Ltd (NASDAQ:HOLI): Provides automation and control technology and applications in the People's Republic of China. Market cap of $382.10M. RSI(14) at 31.76. TTM gross margin at 37.28% vs. industry gross margin at 36.67%. TTM operating margin at 16.81% vs. industry operating margin at 9.91%. TTM pretax margin at 17.43% vs. industry pretax margin at 10.74%. The stock is a short squeeze candidate, with a short float at 17.1% (equivalent to 20.25 days of average volume). It's been a rough couple of days for the stock, losing 10.56% over the last week.

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

Source: 13 Oversold, Highly Profitable Stocks