Do you like to be able to rely on a stock's dividend income? Looking for undervalued stocks? Looking for ways to dip deeper into a company's profitability? For ideas on where to look, we ran a screen you may be interested in.
The Price/Sales ratio is a price-multiple valuation metric used to help identify if a firm is cheap by its twelve month trailing sales numbers. In the most basic terms, it let's an investor know how much the investment community is willing to pay for every dollar worth of sales. A firm with a P/S ratio of one or lower would be viewed as cheap because investors are paying $1 or less for every dollar worth of a firm's sales. On the other hand, a firm is generally considered to be expensive when the P/S ratio is above three. To be clear, these are general guidelines used by the investment community, not hard rules. Price/Sales Ratio = Current Stock Price/Revenue (sales) per Share
The Net Margin is a profitability metric that illustrates, by percentage, how much of every dollar earned gets turned into a bottom line profit. This is just one of many profitability metrics used by investors and analysts to better understand what the company is being left with at the end of the day. Generally, a firm that can expand its net profit margins over a period of time will see its stock price rise as well due to the trend of increasing profitability. Net Margin = Net Income/Total Revenue
We first looked for Dividend stocks that are trading at a discount (P/S<1) and with strong profitability (Net Margin [TTM] >10%). We did not screen out any sectors or market caps.
Do you think these dividend stocks are at too low of valuations given their fundamentals? Use this list as a starting point for your own analysis.
1) DeVry, Inc. (DV)
|Industry:||Education & Training Services|
DV has a Price/Sales Ratio of 1.00 and Net Margin of 10.93%. The short interest was 1.78% as of 04/19/2012.
DeVry Inc., together with its subsidiaries, provides educational services worldwide. The company operates various institutions, including Advanced Academics, American University of the Caribbean, Becker Professional Education, Carrington College and Carrington College California, Chamberlain College of Nursing, DeVry Brasil, DeVry University, and Ross University. These institutions offer an array of programs in business, healthcare, and technology, as well as serve students in middle school through post-secondary education, and accounting and finance professionals.
2) Ford Motor Co. (F)
|Industry:||Auto Manufacturers - Major|
F has a Price/Sales Ratio of 0.33 and Net Margin of 14.84%. The short interest was 3.85% as of 04/19/2012.
Ford Motor Company engages in the development, manufacture, distribution, and service of vehicles and related parts worldwide. The company operates through two sectors, Automotive and Financial Services. The automotive sector offers vehicles primarily under the Ford and Lincoln brand names. This sector markets cars, trucks, and parts through retail dealers in North America, and through distributors and dealers outside North America.
3) Morgan Stanley (MS)
|Industry:||Investment Brokerage - National|
MS has a Price/Sales Ratio of 0.91 and Net Margin of 11.95%. The short interest was 1.78% as of 04/19/2012.
Morgan Stanley, a financial holding company, provides various financial products and services to corporations, governments, financial institutions, and individuals worldwide. The company's Institutional Securities segment offers financial advisory services on mergers and acquisitions, divestitures, joint ventures, corporate restructurings, recapitalizations, spin-offs, exchange offers, leveraged buyouts, takeover defenses, and shareholder relations, as well as capital raising and corporate lending services. This segment also engages in investment activities; and sales, trading, financing, and market-making activities, including equity trading, interest rates, credit and currencies, and commodities, as well as financing services, such as prime brokerage, consolidated clearance, settlement, custody, financing, and portfolio reporting services.
4) Chevron Corporation (CVX)
|Industry:||Major Integrated Oil & Gas|
CVX has a Price/Sales Ratio of 0.80 and Net Margin of 10.65%. The short interest was 0.99% as of 04/19/2012. Chevron Corporation, through its subsidiaries, engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. It operates in two segments, Upstream and Downstream. The Upstream segment is involved in the exploration, development, and production of crude oil and natural gas; liquefaction, transportation, and re-gasification associated with liquefied natural gas; transportation of crude oil through pipelines; and processing, transportation, storage, and marketing of natural gas, as well as holds an interest in a gas-to-liquids project.
*Company profiles were sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.