5 Low P/E Stocks Trading Near 52 Week Highs

Posted:10/25/12
By:Freda Ding

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5 Low P/E Stocks Trading Near 52 Week Highs

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Looking for potentially undervalued stocks that are on their way up? We ran a screen with this in mind.

We started with a universe of stocks with a P/E ratio of 15 or lower. To narrow down the universe we screened for names trading close to their 52-week highs. This potentially yields stocks that have suffered shocks earlier or that are experiencing earnings growth not yet reflected in the market.

Last, we filtered out stocks with margins (gross, operating, and pretax) below industry averages. This suggests they are running more a profitable business than their peers.

Business Section: Investing Ideas

With the exception of Yongye (YONG), all of the companies from this screening process were in financial services. This is an interesting result: Commercial banking services can make a healthy margins but financial products are somewhat volatile.

Discover (DFS) tends to trade cheaply at a P/E below 10 while posting high profit margins and substantial earnings per share. However, its smaller network makes it more risky compared to bigger credit card companies. It might be helpful to consider market size, region, and product range for these “cheap” stocks that are starting to trade up.

Check out the monthly returns for this list:

1. Discover Financial Services (DFS, Earnings, Analysts, Financials): Operates as a credit card issuer and electronic payment services company primarily in the United States. Market cap at $20.17B, most recent closing price at $39.95. TTM gross margin at 48.65% vs. industry average at 33.13%. TTM operating margin at 47.59% vs. industry average at 30.95%. TTM pretax margin at 41.93% vs. industry average at 24.9%.

2. Wilshire Bancorp Inc. (WIBC, Earnings, Analysts, Financials): Operates as the holding company for Wilshire State Bank that offers a range of financial products and services. Market cap at $448.35M, most recent closing price at $6.29. TTM gross margin at 90.55% vs. industry average at 73.27%. TTM operating margin at 62.5% vs. industry average at 42.74%. TTM pretax margin at 43.29% vs. industry average at 24.32%.

3. Yongye International, Inc. (YONG, Earnings, Analysts, Financials): Engages in the research, development, manufacture, and sale of fulvic acid based liquid and powder nutrient compounds for plants and animals, which are used in the agriculture industry in the People’s Republic of China. Market cap at $303.33M, most recent closing price at $5.50. TTM gross margin at 60.24% vs. industry average at 37.4%. TTM operating margin at 26.18% vs. industry average at 16.21%. TTM pretax margin at 27.63% vs. industry average at 14.55%.

4. NASB Financial Inc. (NASB, Earnings, Analysts, Financials): Operates as the bank holding company for North American Savings Bank, F. Market cap at $173.45M, most recent closing price at $22.04. TTM gross margin at 78.8% vs. industry average at 64.15%. TTM operating margin at 53.89% vs. industry average at 36.47%. TTM pretax margin at 24.71% vs. industry average at 19.01%.

5. Pacific Premier Bancorp Inc. (PPBI, Earnings, Analysts, Financials): Operates as the holding company for Pacific Premier Bank that provides various commercial banking services to businesses and consumers in Southern California. Market cap at $117.57M, most recent closing price at $11.37. TTM gross margin at 84.95% vs. industry average at 73.27%. TTM operating margin at 49.75% vs. industry average at 42.74%. TTM pretax margin at 41.99% vs. industry average at 24.32%.