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Many companies rely on sales as their primary source of income, so evaluating their inventory trends is all the more important.

To illustrate this, we ran a screen. We began with stocks that are technically oversold, with RSI(14) readings below 40. We then screened these names for those with strong trends in revenue relative to inventory: increases in revenue outpacing increases in inventory year-over-year, as well as inventory comprising a smaller portion of current assets over the same time period.

To understand why these trends are positive, think why the opposite trends would be negative. If a company was seeing a buildup in inventory faster than revenue, it may indicate that they are having trouble selling their inventory.

Of course, management has discretion over the amount of inventory they hold, and they may be gearing up for higher future expected sales.

Interactive Chart: Press Play to compare changes in market cap over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

Do you think these companies have strong sales trends? Use this list as a starting point for your own analysis.

1. CAE Inc. (NYSE:CAE): Designs, manufactures, and supplies simulation equipment and services; and develops integrated training solutions to the military, commercial airlines, business aircraft operators, aircraft manufacturers, and healthcare education and service providers worldwide. RSI(14) at 31.81. Revenue grew by 10.3% during the most recent quarter ($453.1M vs. $410.8M y/y). Inventory grew by -63.37% during the same time period ($145.3M vs. $396.7M y/y). Inventory, as a percentage of current assets, decreased from 42.17% to 13.32% during the most recent quarter (comparing 3 months ending 2011-12-31 to 3 months ending 2010-12-31).

2. Dril-Quip, Inc. (NYSE:DRQ): Designs, manufactures, fabricates, inspects, assembles, tests, and markets engineered offshore drilling and production equipment for use in deepwater, harsh environment, and severe service applications worldwide. RSI(14) at 37.26. Revenue grew by 21.23% during the most recent quarter ($171.65M vs. $141.59M y/y). Inventory grew by 14.12% during the same time period ($277.8M vs. $243.43M y/y). Inventory, as a percentage of current assets, decreased from 35.37% to 34.76% during the most recent quarter (comparing 3 months ending 2011-12-31 to 3 months ending 2010-12-31).

3. Eldorado Gold Corp. (NYSE:EGO): Engages in the discovery, exploration, development, production, and reclamation of gold properties in Brazil, the People's Republic of China, Greece, and Turkey. RSI(14) at 35.58. Revenue grew by 42.46% during the most recent quarter ($303.36M vs. $212.95M y/y). Inventory grew by 11.41% during the same time period ($164.06M vs. $147.26M y/y). Inventory, as a percentage of current assets, decreased from 26.09% to 24.93% during the most recent quarter (comparing 3 months ending 2011-12-31 to 3 months ending 2010-12-31).

4. Generac Holdings Inc. (NYSE:GNRC): 0 RSI(14) at 39.46. Revenue grew by 65.99% during the most recent quarter ($267.31M vs. $161.04M y/y). Inventory grew by 27.51% during the same time period ($162.12M vs. $127.14M y/y). Inventory, as a percentage of current assets, decreased from 46.65% to 42.3% during the most recent quarter (comparing 3 months ending 2011-12-31 to 3 months ending 2010-12-31).

5. Randgold Resources Ltd. (NASDAQ:GOLD): Engages in the exploration and mining of gold mines in west and central Africa. RSI(14) at 37.71. Revenue grew by 116.84% during the most recent quarter ($311.47M vs. $143.64M y/y). Inventory grew by 11.98% during the same time period ($218.95M vs. $195.52M y/y). Inventory, as a percentage of current assets, decreased from 28.94% to 25.91% during the most recent quarter (comparing 3 months ending 2011-12-31 to 3 months ending 2010-12-31).

6. Harmony Gold Mining Co. Ltd. (NYSE:HMY): Engages in underground and surface gold mining operations in South Africa and Papua New Guinea. RSI(14) at 34.6. Revenue grew by 37.1% during the most recent quarter ($595M vs. $434M y/y). Inventory grew by -14.69% during the same time period ($122M vs. $143M y/y). Inventory, as a percentage of current assets, decreased from 33.26% to 25.79% during the most recent quarter (comparing 3 months ending 2011-12-31 to 3 months ending 2010-12-31).

7. Zhongpin, Inc. (NASDAQ:HOGS): Engages in the processing and distribution of meat and food products primarily in the People's Republic of China. RSI(14) at 31.35. Revenue grew by 65.13% during the most recent quarter ($398.09M vs. $241.08M y/y). Inventory grew by -14.42% during the same time period ($37.14M vs. $43.4M y/y). Inventory, as a percentage of current assets, decreased from 19.13% to 10.11% during the most recent quarter (comparing 3 months ending 2011-09-30 to 3 months ending 2010-09-30).

8. Jaguar Mining Inc. (JAG): Engages in the production of gold, as well as in the acquisition, exploration, development, and operation of gold mineral properties in Brazil. RSI(14) at 32.24. Revenue grew by 43.79% during the most recent quarter ($70.04M vs. $48.71M y/y). Inventory grew by -6.61% during the same time period ($31.95M vs. $34.21M y/y). Inventory, as a percentage of current assets, decreased from 32.51% to 19.83% during the most recent quarter (comparing 3 months ending 2011-09-30 to 3 months ending 2010-09-30).

9. Mercury Computer Systems, Inc. (NASDAQ:MRCY): Designs, manufactures, and markets high-performance embedded, real-time digital signal and image processing systems and software for embedded, and other specialized commercial and defense computing markets. RSI(14) at 34.75. Revenue grew by 22.43% during the most recent quarter ($67.96M vs. $55.51M y/y). Inventory grew by 10.32% during the same time period ($22.76M vs. $20.63M y/y). Inventory, as a percentage of current assets, decreased from 13.76% to 11.44% during the most recent quarter (comparing 3 months ending 2011-12-31 to 3 months ending 2010-12-31).

10. Murphy Oil Corporation (NYSE:MUR): Engages in the exploration and production of oil and gas properties worldwide. RSI(14) at 38.41. Revenue grew by 22.53% during the most recent quarter ($6,817.51M vs. $5,564.07M y/y). Inventory grew by -12.54% during the same time period ($666.64M vs. $762.21M y/y). Inventory, as a percentage of current assets, decreased from 21.47% to 19.34% during the most recent quarter (comparing 3 months ending 2011-12-31 to 3 months ending 2010-12-31).

11. Northwest Natural Gas Company (NYSE:NWN): Distributes natural gas primarily in Oregon, Washington, and California. RSI(14) at 37.43. Revenue grew by 1.14% during the most recent quarter ($271.2M vs. $268.14M y/y). Inventory grew by -1.94% during the same time period ($78.83M vs. $80.39M y/y). Inventory, as a percentage of current assets, decreased from 24.34% to 22.61% during the most recent quarter (comparing 3 months ending 2011-12-31 to 3 months ending 2010-12-31).

12. Time Warner Inc. (NYSE:TWX): Operates as a media and entertainment company in the United States and internationally. RSI(14) at 39.39. Revenue grew by 4.88% during the most recent quarter ($8,193M vs. $7,812M y/y). Inventory grew by -1.56% during the same time period ($1,890M vs. $1,920M y/y). Inventory, as a percentage of current assets, decreased from 14.41% to 14.07% during the most recent quarter (comparing 3 months ending 2011-12-31 to 3 months ending 2010-12-31).

*Accounting data sourced from Google Finance, all other data sourced from Finviz.

Source: 12 Oversold Stocks With Encouraging Inventory Trends