For Immediate Release
Chicago, IL – May 10, 2023 – Stocks in this week’s article are Hudson Technologies (
HDSN Quick Quote HDSN - Free Report) , ArcelorMittal ( MT Quick Quote MT - Free Report) , KB Home ( KBH Quick Quote KBH - Free Report) , and Pampa Energia S.A. ( PAM Quick Quote PAM - Free Report) . 4 Low Price-to-Sales Stocks for Promising Market Returns
Investment in stocks after the analysis of the valuation metrics is considered one of the best practices. When considering valuation metrics, the price-to-earnings ratio has always been the obvious choice. This is because calculations based on earnings are easy and come in handy. However, the price-to-sales ratio is convenient for determining the value of stocks that are incurring losses or in an early cycle of development, generating meager or no profit.
What’s Price-to-Sales Ratio?
While a loss-making company with a negative price-to-earnings ratio falls out of investor favor, its price-to-sales can indicate the hidden strength of the business. This underrated ratio is also used to identify a recovery situation or ensure that a company's growth is not overvalued.
A stock’s price-to-sales ratio reflects how much investors pay for each dollar of revenue generated by a company.
If the price-to-sales ratio is 1, investors are paying $1 for every $1 of revenues generated by the company. Therefore, a stock with a price-to-sales below 1 is a good bargain as investors need to pay less than a dollar for a dollar’s worth.
Thus, a stock with a lower price-to-sales ratio is a more suitable investment than a stock with a high price-to-sales ratio.
The price-to-sales ratio is often preferred over price-to-earnings, as companies can manipulate their earnings using various accounting measures. However, sales are harder to manipulate and are relatively reliable.
However, one should keep in mind that a company with a high debt and a low price-to-sales ratio is not an ideal choice. The high debt level will have to be paid off at some point, leading to further share issuance, a rise in market cap, and, ultimately, a higher price-to-sales ratio.
In any case, the price-to-sales ratio used in isolation cannot do the trick. One should analyze other ratios like Price/Earnings, Price/Book and Debt/Equity before arriving at any investment decision.
Hudson Technologies ( HDSN Quick Quote HDSN - Free Report) , ArcelorMittal ( MT Quick Quote MT - Free Report) , KB Home ( KBH Quick Quote KBH - Free Report) , and Pampa Energia S.A. ( PAM Quick Quote PAM - Free Report) are some companies with a low price-to-sales ratio and the potential to offer higher returns.
Here are four of the 19 stocks that qualified the screening:
Hudson is a leading provider of innovative solutions to recurring problems within the refrigeration industry. The company's proprietary RefrigerantSide Services increase operating efficiency and energy savings, and remove moisture, oils and other contaminants frequently found in the refrigeration circuits of large comfort cooling and process refrigeration systems.
In addition, the company sells refrigerants and provides traditional reclamation services to the commercial and industrial air conditioning and refrigeration markets. HDSN has a Value Score of A and currently carries a Zacks Rank #2.
ArcelorMittal is the world’s leading steel and mining company. With a presence in more than 60 countries, it operates a balanced portfolio of cost-competitive steel plants across the developed and developing world. It is the leader in all the main sectors — automotive, household appliances, packaging and construction. The company is expanding its steel-making capacity and has been focused on shifting to high-added-value products. As part of this move, ArcelorMittal is expanding its automotive steel line of products. The company is expanding its global portfolio of automotive steels by launching a new generation of AHSS. The launch of these steels is in sync with the company’s Action 2020 program.
ArcelorMittal has been focused on executing its cost-reduction actions in the wake of the coronavirus pandemic. The company is executing a new $1-billion fixed-cost-reduction program, which includes actions to improve productivity and maintenance efficiency, and rationalize support functions. The MT stock currently has a Value Score of A and a Zacks Rank #1. You can see
. the complete list of today’s Zacks #1 Rank stocks here
Based in Los Angeles, CA,
KB Home is a well-known homebuilder in the United States and one of the largest in the state. The company’s Homebuilding operations include building and designing homes that cater to first-time, move-up and active adult homebuyers on acquired or developed lands. KB Home also builds attached and detached single-family homes, townhomes and condominiums. KB Home’s Financial Services operations offer mortgage banking, title and insurance services to homebuyers. The segment generates revenues mainly from insurance commissions and the provision of title services.
KBH’s growth is driven by the Returns-Focused Growth Plan, which includes the execution of its core business strategy, improving asset efficiency and monetizing significant deferred tax assets. Its long-term growth is attributable to the increase in backlog and its ability to match housing starts to net orders. Also, KB Home’s robust land acquisition strategies assist it to reduce debt, and boost gross margin and returns. The KBH stock currently has a Value Score of A and a Zacks Rank #2. The company has an expected long-term earnings growth rate of 7.1%.
Pampa Energia is an independent energy integrated company in Argentina. Through its subsidiaries, the company is engaged in the generation, transmission and distribution of electricity in Argentina. PAM operates through Electricity Generation, Oil and Gas, Petrochemicals, and Holding and Other Business segments. It generates electricity through thermal generation plants, thermal gas-fired generation plants and hydroelectric power generation systems, as well as a wind farm.
The company also explores for and produces oil and gas and operates high voltage electricity transmission network. It also produces petrochemicals, such as styrene, styrene butadiene rubber, and polystyrene. In addition, it engages in gas transportation and advisory services activities. PAM currently has a Zacks Rank #2 and a Value Score of A.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your trial to the Research Wizard today. And the next time you read an economic report, open up the Research Wizard, plug your finds in and see what gems come out.
. Click here to sign up for a free trial to the Research Wizard today For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2092239/4-low-price-to-sales-stocks-for-promising-market-returns Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. About Screen of the Week
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