I feel that in order to see substantial gains in the market, one must do substantial research to find stocks that are being sold at a true "value."
When looking for stocks that are "undervalued," there are several facts one can dissect, and even speculation can be used (and often is). Many methods are used to find stocks that are considered undervalued. One popular method is PEG (Price/Earnings to Growth). I like to use this ratio because unlike the P/E, it takes into account growth. Below, I have screened four stocks that I believe to be undervalued given their < 1 PEG. These four stocks' EPS growth rate in the past five years have been >25% and are expected to be >25% for the next five years. Also, these companies have a low long-term debt / equity ratio, further showing how undervalued these companies truly are. Below is my analysis of four undervalued stocks that I feel are poised for a turnaround:
Amtech Systems, Inc. (ASYS) is a global provider of thermal processing systems, including related automation, parts and services for the solar/photovoltaic, semiconductor, silicon wafer and microelectromechanical systems [MEMS] industries. It designs, assembles, sells and installs capital equipment and related consumables used in the manufacture of wafers, primarily for the solar and semi-conductor industries. It sells these products to manufacturers of solar cells, silicon wafers and semi-conductors worldwide, particularly in Asia, United States and Europe. The current market price is $4.23 with a one-year analyst price target of $6.44. This represents a 52.25% upside potential.
Over the past three years, the company has reported three positive (>2%), one negative, and zero in-line surprises. The average surprise for this time period has been 14.0%. Most recently on 05/10/12, the company reported quarterly earnings of -0.54 per share, a negative surprise of -143.2 % below the consensus -0.22. This has pushed the price of the stock near its 52-week low of $4. Despite the recent grim earnings release, ASYS has a strong balance sheet that leaves it well positioned to ride the current slump in solar equipment spending. Given the strong balance sheet and the solid performance of Amtech's backlog thus far, shows limited downside in the stock at these levels. The five-year EPS growth rate has been 45.85% and is expected to be 35% over the next five years. The company's long-term debt / equity is 0, which is another reason I feel the stock has reached its bottom, and has nowhere else to go but up.
|Index||-||P/E||10.12||EPS||0.43||Insider Own||2.25%||Shs Outstand||9.48M||Perf Week||-4.19%|
|Market Cap||41.24M||Forward P/E||11.76||EPS next Y||0.37||Insider Trans||30.62%||Shs Float||8.92M||Perf Month||4.57%|
|Income||4.42M||PEG||0.29||EPS next Q||-0.51||Inst Own||45.30%||Short Float||12.01%||Perf Quarter||-48.94%|
|Sales||178.03M||P/S||0.23||EPS this Y||126.36%||Inst Trans||-0.46%||Short Ratio||8.44||Perf Half Y||-45.63%|
|Book/sh||11.57||P/B||0.38||EPS next Y||127.40%||ROA||1.33%||Target Price||6.44||Perf Year||-76.73%|
|Cash/sh||5.14||P/C||0.85||EPS next 5Y||35.00%||ROE||4.10%||52W Range||4.00 - 21.65||Perf YTD||-48.88%|
|Dividend||-||P/FCF||-||EPS past 5Y||45.85%||ROI||2.25%||52W High||-80.55%||Beta||1.94|
|Dividend %||-||Quick Ratio||1.94||Sales past 5Y||43.57%||Gross Margin||32.36%||52W Low||5.25%||ATR||0.28|
|Employees||420||Current Ratio||2.64||Sales Q/Q||-64.79%||Oper. Margin||5.38%||RSI (14)||37.39||Volatility||4.95% 5.79%|
|Optionable||Yes||Debt/Eq||0.00||EPS Q/Q||-169.72%||Profit Margin||1.39%||Rel Volume||0.86||Prev Close||4.35|
|Shortable||Yes||LT Debt/Eq||0.00||Earnings||May 10||Payout||0.00%||Avg Volume||126.93K||Price||4.21|
POZEN Inc. (POZN) is a pharmaceutical company focused on transforming medicine. The company has developed Treximet in collaboration with GlaxoSmithKline (GSK). On April 30, 2010, the Food and Drug Association (FDA) approved VIMOVO for the relief of the signs and symptoms of osteoarthritis [OA], rheumatoid arthritis [RA]and ankylosing spondylitis [AS] and to decrease the risk of developing gastric ulcers in patients at risk of developing NSAID-associated gastric ulcers. The current market price is $6.29, with a one-year analyst price target of $9. This represents a 43.08% upside potential.
Over the past four quarters, the company has reported two positive (>2%) and two negative (<-2%) surprise earnings. The average surprise for this time period has been -3.4%. The company's gross margin has been higher than its Industry average for each of the past five years. EPS history over the past five years has been 74.08% and is expected to stay at an average of 30% over the next five years. The company has a very strong balance sheet, given no debt, and a profit margin of 47.3 %. This company has an extremely low PEG of 0.19, and I would expect this price to continue to rise substantially.
|Index||-||P/E||5.69||EPS||1.31||Insider Own||1.96%||Shs Outstand||29.92M||Perf Week||8.92%|
|Market Cap||222.90M||Forward P/E||106.43||EPS next Y||0.07||Insider Trans||37.52%||Shs Float||26.59M||Perf Month||12.20%|
|Income||39.63M||PEG||0.19||EPS next Q||-0.25||Inst Own||50.48%||Short Float||19.40%||Perf Quarter||55.21%|
|Sales||83.78M||P/S||2.66||EPS this Y||83.21%||Inst Trans||3.57%||Short Ratio||8.08||Perf Half Y||97.61%|
|Book/sh||3.26||P/B||2.29||EPS next Y||107.80%||ROA||47.90%||Target Price||9.00||Perf Year||60.91%|
|Cash/sh||3.37||P/C||2.21||EPS next 5Y||30.00%||ROE||51.73%||52W Range||2.15 - 8.12||Perf YTD||88.61%|
|Dividend||-||P/FCF||4.95||EPS past 5Y||74.08%||ROI||51.19%||52W High||-22.51%||Beta||1.39|
|Dividend %||-||Quick Ratio||-||Sales past 5Y||45.10%||Gross Margin||-||52W Low||192.64%||ATR||0.32|
|Employees||32||Current Ratio||19.49||Sales Q/Q||-71.11%||Oper. Margin||47.11%||RSI (14)||39.12||Volatility||3.81% 4.75%|
|Optionable||Yes||Debt/Eq||0.00||EPS Q/Q||-47.29%||Profit Margin||47.30%||Rel Volume||1.02||Prev Close||7.45|
|Shortable||Yes||LT Debt/Eq||0.00||Earnings||May 01 BMO||Payout||0.00%||Avg Volume||638.39K||Price||6.29|
Atmel Corporation (ATML) is engaged in designing, developing and supply of microcontrollers. The company offers a portfolio of touch products, which integrate its microcontrollers with touch focused property. The company also designs and sells products, which are complementary to is microcontroller business, including nonvolatile memory and flash memory products, radio frequency [RF] and mixed-signal components and application specific integrated circuits [IC]. The current market price is $6.65, with a one-year analyst price target of $10.29. This represents a 54.74% upside potential.
Over the past three years, the company has reported three positive (>2%), one negative (<-2%), and zero in-line surprises. The average surprise for this time period has been 10.2%. Most recently on 05/02/12, the company reported quarterly earnings of 0.05 per share, a positive surprise of 28.2% below the consensus 0.04. Despite the cluster of positive/negative surprises, the company has a five-year EPS growth rate of 42.55% and expects another 27.43% over the next five years. The company's days sales in receivables is at its five-year low and based on its PEG of 0.46, ATML currently trades at a 26% discount to its Semiconductors Industry peers. Atmel has a strong balance sheet with a long-term debt / equity ratio of 0 which is another reason this stock is a must have for value investors.
|Index||-||P/E||12.55||EPS||0.56||Insider Own||2.35%||Shs Outstand||443.78M||Perf Week||3.38%|
|Market Cap||3.12B||Forward P/E||11.72||EPS next Y||0.60||Insider Trans||-1.60%||Shs Float||432.01M||Perf Month||-3.83%|
|Income||260.82M||PEG||0.46||EPS next Q||0.05||Inst Own||88.97%||Short Float||6.50%||Perf Quarter||-32.21%|
|Sales||1.70B||P/S||1.84||EPS this Y||-24.44%||Inst Trans||4.76%||Short Ratio||3.90||Perf Half Y||-9.64%|
|Book/sh||2.38||P/B||2.95||EPS next Y||57.89%||ROA||16.83%||Target Price||10.19||Perf Year||-46.09%|
|Cash/sh||0.67||P/C||10.43||EPS next 5Y||27.43%||ROE||24.71%||52W Range||6.49 - 14.71||Perf YTD||-13.21%|
|Dividend||-||P/FCF||21.89||EPS past 5Y||42.55%||ROI||21.97%||52W High||-54.93%||Beta||1.21|
|Dividend %||-||Quick Ratio||2.15||Sales past 5Y||1.53%||Gross Margin||48.56%||52W Low||2.16%||ATR||0.28|
|Employees||5200||Current Ratio||3.44||Sales Q/Q||-22.45%||Oper. Margin||19.13%||RSI (14)||38.48||Volatility||3.56% 3.97%|
|Optionable||Yes||Debt/Eq||0.00||EPS Q/Q||-71.11%||Profit Margin||15.35%||Rel Volume||0.64||Prev Close||7.03|
|Shortable||Yes||LT Debt/Eq||0.00||Earnings||May 02 AMC||Payout||0.00%||Avg Volume||7.21M||Price||6.63|
Jazz Pharmaceuticals plc, formerly (JAZZ) is a specialty biopharmaceutical company. The company's marketed products include Xyrem (sodium oxybate oral solution), which is the product approved by the United States Food and Drug Administration (FDA), for the treatment of both cataplexy and excessive daytime sleepiness in patients with narcolepsy and Luvox CR (fluvoxamine maleate) marketed for the treatment of obsessive compulsive disorder. The current market price is $45.2 with a one-year analyst price target of $63.13. This represents a 39.67% upside potential.
Over the past three years, the company has reported three positive (>2%) and one in-line (within 2%) surprises. The average surprise for this time period has been 4.8%. Most recently on 05/08/12, the company reported quarterly earnings of 0.91 per share, a positive surprise of 8.1% above the consensus 0.84. JAZZ's current forward PEG of 0.3 represents an 84% discount to its Diversified Pharmaceuticals Industry average and based on trailing P/E trades at a 39% discount. JAZZ is currently enjoying a five-year EPS growth rate of 168.09% and expects its earnings to grow another 25.65%. This company also boasts zero long-term debt / equity. I believe this company will continue to rise throughout the year and is a must have for any portfolio.
|Index||-||P/E||17.24||EPS||2.67||Insider Own||2.59%||Shs Outstand||56.73M||Perf Week||8.64%|
|Market Cap||2.61B||Forward P/E||8.15||EPS next Y||5.65||Insider Trans||110.11%||Shs Float||55.43M||Perf Month||5.12%|
|Income||130.84M||PEG||0.67||EPS next Q||1.05||Inst Own||92.20%||Short Float||5.52%||Perf Quarter||-2.56%|
|Sales||329.81M||P/S||7.92||EPS this Y||221.11%||Inst Trans||0.85%||Short Ratio||3.47||Perf Half Y||25.80%|
|Book/sh||13.78||P/B||3.34||EPS next Y||22.56%||ROA||24.93%||Target Price||63.13||Perf Year||49.01%|
|Cash/sh||4.30||P/C||10.69||EPS next 5Y||25.65%||ROE||31.08%||52W Range||29.21 - 54.50||Perf YTD||19.16%|
|Dividend||-||P/FCF||17.41||EPS past 5Y||168.09%||ROI||29.62%||52W High||-17.21%||Beta||2.08|
|Dividend %||-||Quick Ratio||2.97||Sales past 5Y||43.43%||Gross Margin||93.24%||52W Low||54.47%||ATR||1.72|
|Employees||431||Current Ratio||3.13||Sales Q/Q||113.07%||Oper. Margin||41.59%||RSI (14)||54.58||Volatility||3.44% 3.82%|
|Optionable||Yes||Debt/Eq||0.00||EPS Q/Q||-0.23%||Profit Margin||39.67%||Rel Volume||0.89||Prev Close||46.03|
|Shortable||Yes||LT Debt/Eq||0.00||Earnings||May 08||Payout||0.00%||Avg Volume||882.24K||Price||45.12|