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Do you consider yourself a contrarian investor? If you prefer looking for opportunities against market trends, your answer might be yes. With that idea in mind, we ran a screen.

We began by screening for underestimated stocks, those that are technically oversold, with relative strength index readings over the last 14 days below 40. We also screened for stocks that appear undervalued relative to earnings growth, with PEG below 1.

Then to analyze these companies' profitability, we ran DuPont analysis. DuPont analyzes profitability by breaking up return on equity (net income/equity) into three components:

ROE

= (Net Profit/Equity)

= (Net profit/Sales)*(Sales/Assets)*(Assets/Equity)

= (Net Profit margin)*(Asset turnover)*(Leverage ratio)

Because increases in net margin and asset turnover are considered good things, DuPont focuses on companies with these positive characteristics: Increasing ROE along with,

•Decreasing leverage, (i.e. decreasing Asset/Equity ratio)

•Improving asset use efficiency (i.e. increasing Sales/Assets ratio) and improving net profit margin (i.e. increasing Net Income/Sales ratio)

Those companies that pass DuPont are seeing positive trends in the sources of their increasing profitability, which adds further weight to the idea that the names are profitable.

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

We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

Do you think these stocks will soon turn around? Use this list as a starting point for your own analysis.

List sorted by PEG.

1. Meritor, Inc. (MTOR): Provides drivetrain mobility and braking solutions for original equipment manufacturers of trucks, trailers, and specialty vehicles. Market cap at $565.83M, most recent closing price at $5.78. PEG at 0.14. RSI(14) at 36.33. MRQ net profit margin at 1.72% vs. 1.45% y/y. MRQ sales/assets at 0.452 vs. 0.44 y/y. MRQ assets/equity at -2.604 vs. -2.557 y/y.

2. Modine Manufacturing Company (MOD): Engages in the development, manufacture, and marketing of thermal management products, components, and systems for use in on-highway and off-highway original equipment manufacturer vehicular applications, and to various building, industrial, refrigeration, and fuel cell markets. Market cap at $315.89M, most recent closing price at $6.58. PEG at 0.3. RSI(14) at 28.63. MRQ net profit margin at 2.22% vs. 1.54% y/y. MRQ sales/assets at 0.44 vs. 0.425 y/y. MRQ assets/equity at 2.395 vs. 2.563 y/y.

3. American Axle & Manufacturing Holdings Inc. (AXL): Engages in the manufacture, engineering, design, and validation of driveline and drivetrain systems, and related components and chassis modules for automotive industry in the United States. Market cap at $719.21M, most recent closing price at $9.46. PEG at 0.35. RSI(14) at 35.05. MRQ net profit margin at 6.81% vs. 5.84% y/y. MRQ sales/assets at 0.3 vs. 0.298 y/y. MRQ assets/equity at -6.648 vs. -5.083 y/y.

4. Green Mountain Coffee Roasters Inc. (GMCR): Engages in the specialty coffee and coffee maker business. Market cap at $4.1B, most recent closing price at $25.37. PEG at 0.39. RSI(14) at 25.58. MRQ net profit margin at 10.51% vs. 10.09% y/y. MRQ sales/assets at 0.267 vs. 0.243 y/y. MRQ assets/equity at 1.54 vs. 2.553 y/y.

5. DFC Global Corp. (DLLR): Provides retail financial services to unbanked and under-banked consumers, and small businesses. Market cap at $709.17M, most recent closing price at $15.87. PEG at 0.56. RSI(14) at 35.33. MRQ net profit margin at 11.67% vs. 7.94% y/y. MRQ sales/assets at 0.153 vs. 0.127 y/y. MRQ assets/equity at 3.618 vs. 5.611 y/y.

6. Twin Disc Inc. (TWIN): Designs, manufactures, and sells marine and heavy duty off-highway power transmission equipment. Market cap at $235.46M, most recent closing price at $18.96. PEG at 0.56. RSI(14) at 26.43. MRQ net profit margin at 9.83% vs. 5.95% y/y. MRQ sales/assets at 0.293 vs. 0.26 y/y. MRQ assets/equity at 2.083 vs. 2.557 y/y.

7. CF Industries Holdings, Inc. (CF): Manufactures and distributes nitrogen and phosphate fertilizer products, serving agricultural and industrial customers worldwide. Market cap at $12.B, most recent closing price at $175.07. PEG at 0.6. RSI(14) at 39.63. MRQ net profit margin at 24.12% vs. 24.02% y/y. MRQ sales/assets at 0.159 vs. 0.128 y/y. MRQ assets/equity at 1.95 vs. 2.106 y/y.

8. Universal Health Services Inc. (UHS): Operates acute care hospitals, behavioral health centers, surgical hospitals, ambulatory surgery centers, and radiation oncology centers. Market cap at $3.97B, most recent closing price at $40.26. PEG at 0.62. RSI(14) at 36.83. MRQ net profit margin at 7.05% vs. 6.5% y/y. MRQ sales/assets at 0.235 vs. 0.231 y/y. MRQ assets/equity at 3.207 vs. 3.635 y/y.

9. Pier 1 Imports, Inc. (PIR): Operates as an importer and specialty retailer of imported decorative home furnishings and gifts in the United States, Canada, and Mexico. Market cap at $1.78B, most recent closing price at $16.25. PEG at 0.63. RSI(14) at 38.49. MRQ net profit margin at 24.17% vs. 13.38% y/y. MRQ sales/assets at 0.579 vs. 0.574 y/y. MRQ assets/equity at 1.668 vs. 1.801 y/y.

10. CNO Financial Group, Inc. (CNO): Engages in the development, marketing, and administration of health insurance, annuity, individual life insurance, and other insurance products for senior and middle-income markets in the United States. Market cap at $1.67B, most recent closing price at $6.89. PEG at 0.64. RSI(14) at 36.61. MRQ net profit margin at 5.26% vs. 4.33% y/y. MRQ sales/assets at 0.034 vs. 0.033 y/y. MRQ assets/equity at 7.057 vs. 8.134 y/y.

11. Insperity, Inc. (NSP): Provides various personnel management services in the United States. Market cap at $684.07M, most recent closing price at $26.08. PEG at 0.68. RSI(14) at 31.79. MRQ net profit margin at 2.33% vs. 1.64% y/y. MRQ sales/assets at 0.803 vs. 0.736 y/y. MRQ assets/equity at 2.892 vs. 2.935 y/y.

12. InfoSpace, Inc. (INSP): Develops search tools and technologies that assist consumers with finding content and information on the Internet. Market cap at $438.1M, most recent closing price at $10.97. PEG at 0.69. RSI(14) at 31.61. MRQ net profit margin at 34.33% vs. 18.22% y/y. MRQ sales/assets at 0.169 vs. 0.141 y/y. MRQ assets/equity at 1.113 vs. 1.169 y/y.

13. Astec Industries, Inc. (ASTE): Engages in the design, engineering, manufacture, and marketing of equipment and components used in road building, utility, and related construction activities worldwide. Market cap at $674.26M, most recent closing price at $29.09. PEG at 0.73. RSI(14) at 30.6. MRQ net profit margin at 4.59% vs. 4.41% y/y. MRQ sales/assets at 0.367 vs. 0.34 y/y. MRQ assets/equity at 1.336 vs. 1.35 y/y.

14. WellCare Health Plans, Inc. (WCG): Provides managed care services for government-sponsored healthcare programs in the United States. Market cap at $2.61B, most recent closing price at $59.93. PEG at 0.73. RSI(14) at 37.07. MRQ net profit margin at 2.86% vs. 1.45% y/y. MRQ sales/assets at 0.666 vs. 0.656 y/y. MRQ assets/equity at 2.276 vs. 2.623 y/y.

15. Universal Electronics Inc. (UEIC): Develops pre-programmed wireless control products and audio-video accessories that enhance home entertainment systems. Market cap at $223.95M, most recent closing price at $14.55. PEG at 0.76. RSI(14) at 26.89. MRQ net profit margin at 4.17% vs. 3.68% y/y. MRQ sales/assets at 0.318 vs. 0.275 y/y. MRQ assets/equity at 1.607 vs. 1.765 y/y.

16. Old Dominion Freight Line Inc. (ODFL): Operates as a less-than-truckload motor carrier primarily in the United States. Market cap at $2.57B, most recent closing price at $44.42. PEG at 0.78. RSI(14) at 37.7. MRQ net profit margin at 6.25% vs. 5.1% y/y. MRQ sales/assets at 0.316 vs. 0.305 y/y. MRQ assets/equity at 1.774 vs. 1.874 y/y.

17. Providence Service Corp. (PRSC): Provides and manages government sponsored social services and non-emergency transportation services. Market cap at $176.95M, most recent closing price at $13.33. PEG at 0.8. RSI(14) at 36.23. MRQ net profit margin at 2.32% vs. 1.97% y/y. MRQ sales/assets at 0.645 vs. 0.567 y/y. MRQ assets/equity at 3.714 vs. 4.731 y/y.

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

Source: 17 Undervalued And Oversold Stocks With Strong Sources Of Profitability