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  • 5 Rock Bottom Stocks Trading Below Book, Sales and Growth 0 comments
    Jul 26, 2011 8:29 AM | about stocks: SOL, BZ, FEED, CSR, HQCL
    We were surprised to find so many stocks still trading at rock bottom valuation levels with the DOW up 10% year to date and almost 100% since March of 2009. With such a large list to work with, we were able to zero in on five that may very well be grossly undervalued. All of these stocks are under $10 per share, are in the small to mid cap range and have less than 100 million shares outstanding. Also, they all have single digit P/E's and/or forward P/E's, PEG's less than 1, are trading below book value and are trading well below sales. These particular stocks are very liquid, heavily traded and all of them are shares of unique businesses.


    SOL (Renesola Ltd.)

    ReneSola engages in the manufacture and sale of solar wafers and solar power products. The company has 87 million shares outstanding with a float of 59 million shares. 7.74 million shares are held short, a quarter of a million less than the previous month. SOL has a P/E of just over 2, and a forward P/E of less than 4. The PEG is 0.2, price to sales is 0.31 and price to book is 0.67. Earnings took a pretty hard hit during the most recently reported quarter. Analysts had expected 58 cents. SOL came in 15% below that at 49 cents after beating or matching estimates consistently during prior quarters. Still, earnings are expected to grow at 18% a year for the next five years. Revenue was 1.2 billion in 2010, is expected to be 1.2 billion in 2011, and is expected to be 1.24 billion in 2012. The recent selling in this issue seems overdone, and whether the P/E is 2 or 4, it still seems dirt cheap.

    BZ (Boise Inc.)

    Boise engages in the manufacture and sale of paper and packaging products. The company has 81 million shares outstanding with a float of 61 million shares. 5.16 million shares are held short which is 1.81 million less than the previous month. BZ has a P/E of 7, and a forward P/E of 8.5. The PEG is 0.46, price to sales is 0.28 and price to book is 0.91. The company has been consistently growing revenues and more significantly, gross profits. The most recent quarter saw some margin problems, mainly due to raw material costs. They also had high selling, general and administrative expenses. Revenues are expected to continue growing, and earnings are seen as improving 20% per year for the next five years. The last five years have seen 40% earnings growth. Yes, earnings growth is slowing, but there seems to be a lot of safety in the current price.

    FEED (AgFeed Industries, Inc.)

    AgFeed Industries engages in the animal nutrition and commercial hog production businesses primarily in the People's Republic of China. The company has 58 million shares outstanding with a float of 55 million shares. 2.06 million shares are held short which is 0.06 million more than the previous month. FEED has a forward P/E of 4. The PEG is 0.55, price to sales is 0.36 and price to book is 0.77. The stock briefly touched a dollar in late May and has climbed back to $1.75, but still looks dirt cheap. Revenues have been climbing year over year and quarter over quarter. The most recent quarter saw a slight revenue decline from the previous quarter, but cost of revenue was way down, allowing the company to record a positive operating income. Earnings are expected to 5 cents next quarter, 8 cents for the current year, and a whopping 43 cents for 2012. The company is expected to see 30% earnings growth per year for the next five years.

    CSR (China Security & Surveillance Technology, Inc.)

    China Security & Surveillance Technology manufactures, installs, distributes, and services surveillance and safety products, systems, and software in the People's Republic of China. The company has 84 million shares outstanding with a float of 61 million shares. 14.59 million shares are held short which is 0.6 million more than the previous month. CSR has a P/E of 6.3 and a forward P/E of 4.7. The PEG is 0.4, price to sales is 0.7 and price to book is 0.69. Revenues have been steadily climbing year over year. Revenues, which were $580 million in 2009 and $684 million in 2010 are expected to be $798 million for this year and $930 million next year. Earnings are seen coming in at 23 cents this quarter, 30 cents next quarter, $1.01 this year and $1.18 next year. The stock has been in a relatively tight trading range between around $5 and $6 since early 2010. $5 seems to be a very solid floor for this issue going forward.

    HSOL (Hanwha SolarOne Co., Ltd.)

    Hanwha SolarOne provides various energy solutions including silicon ingots, wafers, monocrystalline and polycrystalline solar cells, and solar modules. The company has 84 million shares outstanding with a float of only 22 million shares. 3 million shares are held short which is 0.18 million more than the previous month. HSOL has a P/E of 3.5 and a forward P/E of 5.8. The PEG is 0.35, price to sales is 0.36 and price to book is 0.55. Earnings came on-line in very strong fashion at $115 million after more than doubling revenues to over $1 billion in 2010 and quadrupling gross profits. Earnings are expected to be 13 cents this quarter, 22 cents next quarter, 84 cents for all of 2011 and 97 cents for 2012. The company has seen 25% earnings growth for the last five years and 18% annual growth is expected for the next five years. There are 10 analysts covering this stock. With all of this in mind, HSOL looks extremely cheap.


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