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Zacks.com featured highlights SP Plus, Thor Industries, Blucora, Micron Technology and CenterPoint Energy

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For Immediate Release

Chicago, IL – August 30, 2017 - Stocks in this week’s article include SP Plus Corp.(NASDAQ: (SP - Free Report) – Free Report), Thor Industries(NYSE: (THO - Free Report) – Free Report), Blucora(NASDAQ: (BCOR - Free Report) – Free Report), Micron Technology(NASDAQ: (MU - Free Report) – Free Report) and CenterPoint Energy(NYSE: (CNP - Free Report) – Free Report).

Screen of the Week of Zacks Investment Research by Kevin Matras:

Why the P/S Ratio Is My Favorite Valuation Metric

This week, I'm going to focus on the Price to Sales ratio for finding great stocks at great values.

The Price to Sales ratio is a great valuation metric. And given the recent run-up in stocks, value, to me, is becoming more and more important.

In fact, aside from the Zacks Rank, if I could only use one item to screen and pick stocks with, this item would be the one.

Definition

Let's first start with a definition.

The Price to Sales ratio is simply: Price divided by Sales

If the Price to Sales ratio is 1, that means you're paying $1 for every $1 of sales the company makes.

A price to sales ratio of 2 means you're paying $2 for every $1 of sales the company makes.

As you might have guessed, the lower the Price the Sales ratio, the better.

A price to Sales ratio of .5 means you're paying 50 cents for every $1 of sales the company makes.

And paying less than a dollar for a dollar's worth of something is a good bargain.

One of the reasons I like the Price to Sales ratio is because it looks at sales rather than earnings, like the P/E ratio does.

And sales are harder to manipulate on an income statement than earnings.

Secondly, I'd be hard pressed to find a screen where adding the Price to Sales ratio didn't improve it.


Price to Sales Study

For me, I prefer to look for stocks with a Price to Sales ratio under 1. Although, I'm willing to go up to 4, depending on the industry.

But in my testing, those with a Price to Sales ratio of 1 or less produced the best returns. Between 1 and 2 also outperformed pretty significantly. But once you got over 4, the odds were against you.

·         P/S range greater than or equal to 0 and less than or equal to 1:
Average Annual Return: 17.8%

·         P/S range greater than 1 and less than or equal to 2: Average Annual Return: 11.1%

·         P/S range greater than 2 and less than or equal to 3: Average Annual Return: 7.3%

·         P/S range greater than 3 and less than or equal to 4: Average Annual Return: 3.8%

·         P/S range greater than 4: Average Annual Return: -7.9%


But the best way to use it, I've found, is to find stocks with a Price to Sales ratio below the median for its Industry.

And that's what we'll be focusing on in this week's screen.

Screen Parameters

Projected Growth Rate greater than or equal to Projected Growth Rate for the S&P
(Above market growth rates.)

Last Earnings Surprise greater than 0
(Positive EPS Surprise)

Last Sales Surprise greater than 0
(Positive Sales Surprise)

Zacks Rank less than or equal to 2
(Only stocks with a Zacks Rank of a Strong Buy or Buy get through.)

Price to Sales less than or equal to Median Price to Sales for its Industry
(Valuations that are lower than their Industry.)

Price greater than or equal to $5

Avg. 20 Day Volume greater than or equal to 100,000


Stock Selections

Here are 5 stocks from this week's list:

(NASDAQ: SPFree Report) SP Plus Corp.
(NYSE: THOFree Report) Thor Industries
(NASDAQ: BCORFree Report) Blucora
(NASDAQ: MUFree Report) Micron Technology
(NYSE: CNPFree Report) CenterPoint Energy

Sign up now for your 2 week free trial to the Research Wizard and get the rest of the stocks on this list. Start using this screen and the Price to Sales ratio in your own trading. Or create your own strategies and test them first before you invest. Know what to buy and when to sell.

Learn how today with the Research Wizard.

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.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.

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Sign up now for your free trial today and start picking better stocks immediately. And with the backtesting feature, you can test your ideas to see how you can improve your trading in both up markets and down markets. Don’t wait for the market to get better before you decide to do better. Start learning how to be a better trader today: https://at.zacks.com/?id=111

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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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.



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