Are you looking for some small cap stocks that you can get for a discount? Today we focused on consumer stocks whose fundamentals suggest that they are undervalued in price, and we narrowed our search by only looking at stocks that industry analysts have rated as 'Buy'. We came up with a pretty interesting list for you to investigate further.
The PEG ratio (price/earnings to growth ratio) is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share [EPS], and the company's expected growth. In general, the P/E ratio is higher for a company with a higher growth rate. Thus using just the P/E ratio would make high-growth companies appear overvalued relative to others. It is assumed that by dividing the P/E ratio by the earnings growth rate, the resulting ratio is better for comparing companies with different growth rates. A lower ratio is 'better' (cheaper) and a higher ratio is 'worse' (expensive) - a PEG ratio of 1 means the company is fairly priced.
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 small cap consumer stocks. Next, we then screened for businesses that analysts rate as "Buy" (2 < mean recommendation < 3). We then screened for businesses that are trading at a discount when considering the company growth rate (PEG Ratio < 1)(P/S<1).
Do you think these small-cap stocks deserve to trade higher? Use our list to help with your own analysis.
1) Fifth & Pacific Companies, Inc. (FNP)
|Industry:||Textile - Apparel Clothing|
Fifth & Pacific Companies, Inc. has a Analysts' Rating of 2.10, a Price/Earnings to Growth Ratio of 0.76, and a Price/Sales Ratio of 0.78. The short interest was 19.04% as of 06/25/2012. Fifth & Pacific Companies, Inc. engages in the design and marketing of a range of apparel and accessories. The company provides luxurious, casual, and fun women's and girl's apparel, jewelry, watches, sleepwear, sunglasses, swimwear, and baby products; and men's and women's denim, woven and knit tops, dresses and sweaters, and graphic tees. It also offers handbags, briefcases, travel bags, and small leather goods; and fashion accessories, footwear, optics, cosmetics and fragrances, tabletop products, legwear and socks, electronics cases, bedding and bath products, and stationery and paper goods.
2) Boise Inc. (BZ)
|Industry:||Paper & Paper Products|
Boise Inc. has a Analysts' Rating of 2.00, a Price/Earnings to Growth Ratio of 0.48, and a Price/Sales Ratio of 0.28. The short interest was 3.55% as of 06/25/2012. Boise Inc., together with its subsidiaries, engages in the manufacture and sale of packaging and paper products in the United States, Europe, Mexico, and Canada. The company's Paper segment offers communication-based papers that include imaging papers for the office and home use; and printing and converting papers used by commercial printers or converters to manufacture envelopes, forms, and other commercial paper products. This segment also provides packaging-demand-driven papers comprising label and release papers, such as label face stocks and release liners; flexible packaging papers consisting of coated and uncoated papers sold to customers for the creation of flexible packaging products for food and nonfood applications; corrugating medium, a raw material used in the manufacture of corrugated sheets and containers; and market pulp for manufacturing paper products.
3) G-III Apparel Group, Ltd. (GIII)
|Industry:||Textile - Apparel Clothing|
G-III Apparel Group, Ltd. has a Analysts' Rating of 1.70, a Price/Earnings to Growth Ratio of 0.58, and a Price/Sales Ratio of 0.39. The short interest was 12.67% as of 06/25/2012. G-III Apparel Group Ltd. designs, manufactures, and markets women's and men's apparel primarily in the United States. It provides outerwear, dresses, sportswear, women's suits, and women's performance wear. The company also offers accessories, such as luggage, women's handbags, small leather goods, and cold weather accessories.
4) Dana Holding Corporation (DAN)
Dana Holding Corporation has a Analysts' Rating of 1.90, a Price/Earnings to Growth Ratio of 0.27, and a Price/Sales Ratio of 0.25. The short interest was 10.50% as of 06/25/2012. Dana Holding Corporation engages in the design, manufacture, and supply of driveline products, technologies, and service parts for vehicle manufacturers worldwide. It provides light axles, driveshafts, structural products, sealing products, thermal products, and related service parts for light trucks, sport utility vehicles, crossover utility vehicles, vans, and passenger cars. The company also offers axles, driveshafts, chassis and side rails, ride controls and related modules and systems, engine sealing products, thermal products, and related service parts for medium- and heavy-duty trucks, buses, and other commercial vehicles.
5) Ethan Allen Interiors Inc. (ETH)
|Industry:||Home Furnishings & Fixtures|
Ethan Allen Interiors Inc. has a Analysts' Rating of 2.50, a Price/Earnings to Growth Ratio of 0.56, and a Price/Sales Ratio of 0.72. The short interest was 20.49% as of 06/25/2012. Ethan Allen Interiors Inc., together with its subsidiaries, engages in the design, manufacture, sourcing, sale, and distribution of home furnishings and accessories. The company provides home decorating and design solutions through its home furnishing retail network. Its products include case goods items, such as beds, dressers, armoires, tables, chairs, buffets, entertainment units, home office furniture, and wooden accents; upholstery home furnishing items comprising sleepers, recliners, chairs, sofas, loveseats, cut fabrics, and leather; and home accessory and other items consisting of window treatments, wall decor, lighting, clocks, bedding and bedspreads, decorative accessories, area rugs, and home and garden furnishings.
*Company profiles were sourced from Finviz. Financial data was sourced from Finviz and Yahoo Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.