Do you prefer stocks that pay back their investors with dividend income? Do you look for companies with low debt? Are you after companies that have manageable long term debt? Looking for undervalued stocks? You might be interested in this list.
The Debt/Equity Ratio illustrates how aggressively a company is financing its growth via debt. The more debt financing that is used in a capital structure, the more volatile earnings can become due to the additional interest expense. Should a company's potentially enhanced earnings fail to exceed the cost associated with debt financing over time, this can lead the company toward substantial trouble.
The Long Term Debt/Equity Ratio is a variation of the traditional debt-to-equity ratio; this value computes the proportion of a company's long-term debt compared to its available capital. By using this ratio, investors can identify the amount of leverage utilized by a specific company and compare it to others to help analyze the company's risk exposure. Generally, companies that finance a greater portion of their capital via debt are considered riskier than those with lower leverage ratios.
The forward P/E is a price multiple valuation metric, which is similar to the current P/E ratio, except that it uses the forecasted earnings instead. While this number might not be as accurate because it uses "forecasted" numbers, it does offer the benefit of illustrating analysts' expectations of a firm. If the market believes that earnings will grow moving forward, then the forward P/E should be lower than the current P/E. Financial Leverage, also known as the Equity Multiplier, illustrates how a firm is financing its assets. The lower the number the more a firm is financing its assets internally through stockholder equity. The higher this metric is the more the firm is relying on debt to finance its assets.
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 dollars 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 dollars 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. These are general guidelines used by the investment community not hard rules to be clear. Price/Sales Ratio = Current Stock Price/Revenue (sales) per Share
We first looked for dividend stocks. From here, we then looked for companies that have maintained a sound capital structure (D/E Ratio<.3). We next screened for businesses that have maintained a sound long term capital structure (Long Term D/E Ratio<.3). From here, we then looked for companies with a low price-multiple premium (forward P/E<10)(P/S<1). We did not screen out any market caps or sectors.
Do you think these stocks will break through to new highs? Use our list to help with your own analysis.
1) Intersections Inc. (INTX)
Intersections Inc. has a Dividend Yield of 6.77% and Payout Ratio of 63.86% and Debt/Equity Ratio of 0.12 and Long Term Debt/Equity Ratio of 0.02 and Forward Price/Earnings Ratio of 9.76 and Price/Sales Ratio of 0.56. The short interest was 2.24% as of 05/23/2012. Intersections Inc. provides subscription based consumer protection services and other consumer products and services primarily in the United States. The company operates in three segments: Consumer Products and Services, Online Brand Protection, and Bail Bonds Industry Solutions. The Consumer Products and Services segment offers identity theft protection and credit information management products and services, such as credit reports, credit monitoring, credit scores, credit education, reports and monitoring of additional information, identity theft recovery, identity theft cost reimbursement, and software and other technology tools and services.
2) Ennis Inc. (EBF)
Ennis Inc. has a Dividend Yield of 4.94% and Payout Ratio of 52.97% and Debt/Equity Ratio of 0.25 and Long Term Debt/Equity Ratio of 0.25 and Forward Price/Earnings Ratio of 6.30 and Price/Sales Ratio of 0.72. The short interest was 2.90% as of 05/23/2012. Ennis, Inc., together with its subsidiaries, engages in the print and manufacture of business forms and other business products. The company operates in two segments, Print and Apparel. The Print segment designs, manufactures, and sells business forms and other printed business products.
3) Communications Systems Inc. (JCS)
Communications Systems Inc. has a Dividend Yield of 5.80% and Payout Ratio of 52.07% and Debt/Equity Ratio of 0.02 and Long Term Debt/Equity Ratio of 0.02 and Forward Price/Earnings Ratio of 7.77 and Price/Sales Ratio of 0.65. The short interest was 2.72% as of 05/23/2012. Communications Systems, Inc., together with its subsidiaries, manufactures and sells modular connecting and wiring devices, digital subscriber line filters, structured wiring systems, and media and rate conversion products primarily in North America, Europe, the Middle East, and Africa. The company's Suttle segment manufactures and markets copper and fiber connectivity systems, enclosure systems, XDSL filters and splitters, and active technologies for voice, data, and video communications under the Suttle brand name; and residential structured wiring products under the SOHO Access brand name. This segment offers its products directly and through distributors to communication companies, smaller telephone companies, electrical/low voltage contractors, home builders, cable customers, and original equipment manufacturers.
*Company profiles were sourced from Finviz. Financial data was sourced from Finviz and Google Finance.