6 Undervalued Mid Cap Stocks Keeping Debt To A Minimum

by: ZetaKap

When you notice that a stock has dropped in price, you may also think it has dropped in value. But that isn't always the case. Sometimes there are market fluctuations that temporarily affect prices of sound companies. To find mid cap stocks that appear to be undervalued but have sound capital structure, we focused on debt ratios. See the graphs and summaries below to learn more about these mid cap stocks that appear to be trading at a discount.

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. It lets an investor know how much the investment community is willing to pay for every dollar's worth of sales. A firm with a P/S ratio of one or lower is cheap because investors are paying $1 or less for every dollar's worth of a firm's sales. A firm is considered to be expensive when the P/S ratio is above three. To be clear, these are general guidelines, not hard rules. Price/Sales Ratio = Current Stock Price/Revenue (sales) per Share

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 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.

We first looked for mid cap stocks. From here, we then looked for companies that are trading at a discount (P/S<1)(PEG Ratio < 1). We then looked for businesses that have maintained a sound long term capital structure (Long Term D/E Ratio<.1). We did not screen out any sectors.

Do you think these mid-cap stocks have more value to price in? Please use our list to assist with your own analysis.

1) Apollo Group Inc. (NASDAQ:APOL)

Sector Services
Industry Education & Training Services
Market Cap $3.01B
Beta 0.36

APOL stock chart

Key Metrics

Price/Sales Ratio 0.68
Price/Earnings to Growth Ratio 0.72
Long Term Debt/Equity Ratio 0.10
Short Interest 15.78%

Apollo Group, Inc., through its subsidiaries, provides online and on-campus educational programs and services at the undergraduate, master's, and doctoral levels. The company offers various degree programs in arts and sciences, business and management, criminal justice and security, education, health care, human services, nursing, psychology, and technology through its campus locations and learning centers in 40 states, the District of Columbia, and Puerto Rico, as well as through its online education delivery system. In addition, the company offers program development, administration, and management consulting services, made up of degree program design, curriculum development, market research, student admissions, and accounting and administrative services to private colleges and universities for their working learners' programs; and sells books and other publications. Apollo Group, Inc. was founded in 1973 and is based in Phoenix, Arizona.

2) The Babcock & Wilcox Company (BWC)

Sector Industrial Goods
Industry Diversified Machinery
Market Cap $2.93B
Beta -

BWC stock chart

Key Metrics

Price/Sales Ratio 0.94
Price/Earnings to Growth Ratio 0.85
Long Term Debt/Equity Ratio 0.00
Short Interest 0.68%

The Babcock & Wilcox Company provides clean energy technology and services for the nuclear, fossil, and renewable power markets worldwide. The company's Power Generation segment designs, engineers, manufactures, supplies, constructs, and services utility and industrial power generation systems, including boilers used to generate steam in electric power plants, pulp and paper making, chemical and process applications, and other industrial uses. Its Nuclear Operations segment engineers, designs, and manufactures naval nuclear reactors for the U.S. Department of Energy/National Nuclear Security Administration's Naval Nuclear Propulsion Program, which in turn supplies them to the U.S. Navy for use in submarines and aircraft carriers. The company's Technical Services segment offers services to the U.S. Government comprising uranium processing, environmental site restoration services, and management and operating services for various U.S. Government-owned facilities. Its Nuclear Energy segment fabricates pressure vessels, reactors, steam generators, heat exchangers, and other auxiliary equipment. In addition, it provides power plant construction, management, and maintenance services; and services for nuclear steam generators and balance of plant equipment, as well as nondestructive examination and tooling/repair solutions. The company was founded in 1867 and is headquartered in Charlotte, North Carolina.

3) Ingram Micro Inc. (NYSE:IM)

Sector Services
Industry Computers Wholesale
Market Cap $2.27B
Beta 1.04

IM stock chart

Key Metrics

Price/Sales Ratio 0.06
Price/Earnings to Growth Ratio 0.87
Long Term Debt/Equity Ratio 0.09
Short Interest 0.77%

Ingram Micro Inc. distributes information technology products and supply chain solutions worldwide. The company offers IT peripheral products, including printers, scanners, displays, projectors, monitors, panels, mass storage, and tape; large format LCD and plasma displays, enclosures, mounts, media players, content software, content creation, and content hosting; cell phones, digital cameras, digital video disc players, game consoles, televisions, audio, media management, and home control; barcode/card printers, AIDC scanners and software, and wireless infrastructure products; IP video surveillance, security alarm systems, fire alarm systems, and access control smart cards and printers; processors, motherboards, hard drives, and memory; and paper, carrying cases, anti-glare screens, and ink and toner supplies. The company sells its products and services to resellers through sales representatives. Ingram Micro Inc. was founded in 1979 and is headquartered in Santa Ana, California.

4) Signet Jewelers Limited (NYSE:SIG)

Sector Services
Industry Jewelry Stores
Market Cap $3.71B
Beta 2.07

SIG stock chart

Key Metrics

Price/Sales Ratio 0.97
Price/Earnings to Growth Ratio 0.96
Long Term Debt/Equity Ratio 0.00
Short Interest 3.48%

Signet Jewelers Limited operates as a specialty jewelry retailer in the United States, the United Kingdom, the Republic of Ireland, and the Channel Islands. The company retails jewelry, watches, and associated services. As of January 28, 2012, it operated a network of 1,318 stores in 50 states in the United States that trade nationally in malls and off-mall locations as Kay Jewelers, and regionally under various mall-based brands, as well as operated as destination superstores under the Jared The Galleria Of Jewelry trade name. The company also operated a network of 535 stores in the United Kingdom, including 14 stores in the Republic of Ireland and 3 in the Channel Islands under the H.Samuel, Ernest Jones, and Leslie Davis trade names in high street locations and shopping malls. Signet Jewelers Limited was founded in 1950 and is based in Hamilton, Bermuda.

5) Chicago Bridge & Iron Company N.V. (NYSE:CBI)

Sector Industrial Goods
Industry General Contractors
Market Cap $3.57B
Beta 2.29

CBI stock chart

Key Metrics

Price/Sales Ratio 0.71
Price/Earnings to Growth Ratio 0.79
Long Term Debt/Equity Ratio 0.00
Short Interest 1.32%

Chicago Bridge & Iron Company N.V. provides conceptual design, technology, engineering, procurement, fabrication, construction, and commissioning services to energy and natural resource industries worldwide. It undertakes various projects in the hydrocarbon, water, and nuclear industries, including above ground storage tanks, elevated storage tanks, liquefied natural gas tanks, pressure vessels, and other specialty structures, such as nuclear containment vessels. The company also under takes project related to upstream and downstream energy infrastructure facilities, such as LNG liquefaction and regasification terminals, gas processing plants, refinery units, petrochemical complexes, and a range of other energy-related projects. In addition, the company provides licenses, services, catalysts, and proprietary equipment to companies in the hydrocarbon refining, petrochemicals, and gas processing industries. Chicago Bridge & Iron Company N.V. was founded in 1889 and is headquartered in The Hague, the Netherlands.

6) KBR, Inc. (NYSE:KBR)

Sector Services
Industry Technical Services
Market Cap $3.94B
Beta 1.31

KBR stock chart

Key Metrics

Price/Sales Ratio 0.46
Price/Earnings to Growth Ratio 0.96
Long Term Debt/Equity Ratio 0.03
Short Interest 0.86%

KBR, Inc. operates as an engineering, construction, and services company worldwide. The company's Hydrocarbons segment designs and constructs liquefied natural gas and gas-to-liquids facilities for the development and transportation; and delivers onshore and offshore oil and natural gas production facilities, including platforms, floating production and subsea facilities, and pipelines. Its Infrastructure, Government, and Power segment provides base operations, facilities management, border security, engineering, procurement, and construction services, and logistics support to industrial commercial, defense, and governmental agencies; and project management, construction management, design, and support services for aviation, road, rail, maritime, water, waste water, building, and pipeline projects. The other segment includes the ventures business that invests in defense equipment and housing, toll roads, and petrochemicals projects. The company was founded in 1901 and is headquartered in Houston, Texas.

*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 08/30/2012.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: This article was prepared for ZetaKap Media by one of our full-time analysts. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.

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