5 Stocks Under $5 Undervalued by EPS Trends

5 Stocks Under $5 Undervalued by EPS Trends

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Many investors are drawn to low-priced stocks because of the large return potential when share price rises by marginal amounts. For the same reason, investors must be very cautious because a small drop in price means a big decrease. To minimize the list of losses it helps to do your homework. 

We compiled a list of stocks trading below $5 per share, with market caps north of $300 million to avoid the risky penny stocks, and analyzed their EPS trends. 

We took only stocks with faster growth in EPS estimates than price over the last month. Here's why: Based on the theoretical assumption that if P/E is equal to a constant K, growth in EPS estimates should be matched by proportionate growth in price. When they don't match up, a mispricing may have occurred. We screened for those exhibiting this mismatch between changes in EPS estimate and price.

The List

Bargain hunting investors should note that just because a stock is trading at a low price does not necessarily mean it is trading below fair value. 

Do you think these stocks should be trading higher? Use this list as a starting point for your own analysis. List Average 1-Year Return: 4% 

1. Alumina Ltd. (AWC, Earnings, Analysts, Financials): Through its 40 % equity interest in Alcoa World Alumina and Chemicals, engages in the bauxite mining, alumina refining, and aluminum smelting businesses.

Market cap at $3.4B, most recent closing price at $4.85.

The EPS estimate for the company's current year increased from 0.07 to 0.08 over the last 30 days, an increase of 14.29%. This increase came during a time when the stock price changed by -6.4% (from 5 to 4.68 over the last 30 days).

 

2. E-House (China) Holdings Limited (EJ, Earnings, Analysts, Financials): Operates as a real estate services company in China.

Market cap at $546.27M, most recent closing price at $4.62.

The EPS estimate for the company's current year increased from 0.34 to 0.39 over the last 30 days, an increase of 14.71%. This increase came during a time when the stock price changed by -0.43% (from 4.67 to 4.65 over the last 30 days).

 

3. Mizuho Financial Group, Inc. (MFG, Earnings, Analysts, Financials): Provides various banking and financial services in Japan and internationally.

Market cap at $53.42B, most recent closing price at $4.43.

The EPS estimate for the company's current year increased from 0.3 to 0.32 over the last 30 days, an increase of 6.67%. This increase came during a time when the stock price changed by 3.52% (from 4.26 to 4.41 over the last 30 days).

 

4. Gafisa S.A. (GFA, Earnings, Analysts, Financials): Operates as a homebuilder in Brazil.

Market cap at $820.95M, most recent closing price at $3.79.

The EPS estimate for the company's current year increased from 0.34 to 0.39 over the last 30 days, an increase of 14.71%. This increase came during a time when the stock price changed by -15.26% (from 4.39 to 3.72 over the last 30 days).

 

5. SIRIUS XM Radio Inc. (SIRI, Earnings, Analysts, Financials): Provides satellite radio services in the United States and Canada.

Market cap at $20.33B, most recent closing price at $3.10.

The EPS estimate for the company's current year increased from 0.1 to 0.11 over the last 30 days, an increase of 10.%. This increase came during a time when the stock price changed by -1.27% (from 3.15 to 3.11 over the last 30 days).
 

 

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10 Responses to “5 Stocks Under $5 Undervalued by EPS Trends”

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    When they don't match up, a mispricing may have occurred. We screened for those exhibiting this mismatch between changes in EPS estimate and price.

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