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NiSource Inc (NYSE:NI) is one of the most traded stocks with an average volume of over three million shares traded daily. It also pays a healthy dividend, offering shell-shocked investors yield in a low-rate environment. Should internet investors fixate on popular stocks like NI?

No. As simple as it sounds, you are better off shopping around than focusing on popular stocks. There are many stocks which offer dividend yields in excess of the 10-year Treasury. Moreover, many of them are trading at lower price multiples.

From a total return perspective that considers capital gains and dividend payments, NI's earnings and future cash flows will determine its value. The future financial potential of a stock can be gauged by using financial metrics to determine how cheaply a stock is priced, its ability to weather hardship, and its growth potential.

As alternatives to NI, consider the following stocks with strong track-records and solid credit scores:

Ticker

Company

Industry

10-Year Average ROE

Altman Z-score

CRWS

Crown Crafts Inc.

Textile - Apparel Clothing

5.7%

5.38

EBF

Ennis Inc.

Office Supplies

11.0%

4.64

GME

GameStop Corp.

Electronics Stores

13.1%

3.47

MANT

ManTech International

Security Software & Services

12.0%

4.02

NAFC

Nash Finch Co.

Food Wholesale

8.5%

5.60

NHC

National Healthcare Corp.

Long-Term Care Facilities

13.8%

3.48

NI

NiSource Inc.

Diversified Utilities

5.8%

0.67

Unlike NI, these alternative stocks are all categorized as "safe" according to the Altman Z-score,* indicating that they are not considered bankruptcy risks. Moreover, the average 10-year return on equity demonstrates that these six stocks have grown shareholder wealth at a respectable annual rate. It is clear from these two metrics that each of these five alternative stocks is a "high" quality stock capable of weathering bad times and delivering positive long-term results.

What's more, these stocks are cheaper and have higher growth prospects:

Ticker

P/E

P/S

P/B

Div Yield

EPS growth past 5 years

EPS growth next 5 years

CRWS

10.00

0.45

1.22

3.9%

4.4%

14.0%

EBF

11.58

0.84

1.21

3.7%

1.8%

17.0%

GME

8.44

0.33

1.08

2.6%

26.9%

9.6%

MANT

9.68

0.46

1.24

2.3%

16.5%

8.1%

NAFC

8.61

0.07

0.89

2.5%

5.3%

15.0%

NHC

11.68

0.84

1.08

2.6%

7.5%

12.0%

NI

21.79

1.08

1.3

4.0%

-2.9%

7.7%

Based on lower price-to-earnings ratios, price-to-sales ratios, and price-to-book ratios, these stocks are cheaper than NI at current market prices. Better yet, they have better growth prospects according to analyst projections. Rather than restrict yourself to concentrated investments in one popular stock like NI, consider a diversified mix of these five securities as a more attractive alternative.

*Please read the article disclaimer.

Source: 6 Dark Horses To Outperform NiSource