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Alberto Abaterusso
Alberto Abaterusso
Articles (2606) 

3 Low Price-Sales Ratio Stock Picks

These profitable businesses have robust financial conditions

December 14, 2020 | About:

Value investors may be interested in the stocks listed below, as they have low price-sales ratios, good profitability and solid financial conditions. These three characteristics result in a high probability that these stocks could be value opportunities, in my opinion.

Molina Healthcare Inc

The first stock investors may be interested in is Molina Healthcare Inc (NYSE:MOH), a Long Beach, California-based healthcare plans company.

The stock price traded at $200.18 per share at close on Dec. 11 for a price-sales ratio of 0.66, which is more compelling than the S&P 500's price-sales ratio of 2.67.

Molina Healthcare has a GuruFocus profitability rating of 6 out of 10, driven by a return on capital (ROC) ratio of 314.98% (versus the industry median of 61.04%) and a three-year earnings per share (EPS) without non-recurring items (NRI) growth rate of 131.9% (versus the industry median of 24.55%).

The company has received a GuruFocus financial strength rating of 7 out of 10. The rating is driven by a high Altman Z-Score of 4.97.

Following a 49.15% increase over the past year, the stock has a market capitalization of $11.87 billion and a 52-week range of $102.85 to $224.

As of December, Wall Street sell-side analysts recommend two strong buys, two buys, eight holds and one underperform rating. They have established an average target price of $231.08 per share.

BorgWarner Inc

The second stock investors could be interested in is BorgWarner Inc (NYSE:BWA), an Auburn Hills, Michigan-based provider of several technical solutions for electric, hybrid and petrol vehicles worldwide.

The stock price traded at $36.52 per share at close on Dec. 11 for a price-sales ratio of 0.86, which is more compelling than the S&P 500's price-sales ratio of 2.67.

BorgWarner has a GuruFocus profitability rating of 8 out of 10, which is driven by an operating margin of 9.97% (versus the industry median of 2.82%) and a return on capital (ROC) ratio of 23.99% (versus the industry median of 5.46%).

The company has received a GuruFocus financial strength rating of 6 out of 10. It is driven by an Altman Z-Score of 3.07.

Following a 17.26% decrease over the past year, the stock now has a market capitalization of $8.93 billion and a 52-week range of $17 to $45.35.

As of December, Wall Street sell-side analysts recommend two strong buys, six buys, 10 holds and three underperform ratings for this stock and have established an average target price of $45.11 per share.

Steel Dynamics Inc

The third stock to consider is Steel Dynamics Inc (NASDAQ:STLD), a Fort Wayne, Indiana-based steel producer and metal recycler with operations in the U.S.

The stock price traded at $39.13 per share at close on Dec. 11 for a price-sales ratio of 0.89, which appeals more than the S&P 500 price-sales ratio of 2.67.

Steel Dynamics has a GuruFocus profitability rating of 7 out of 10. It is driven by a return on capital (ROC) ratio of 14.75% (versus the industry median of 4.43%).

The company has a positive GuruFocus financial strength rating of 6 out of 10, driven by an Altman Z-Score of 3.57.

As a result of a 15.19% increase that took place over the past year, the stock has a market capitalization of $8.23 billion, while the 52-week range is $14.98 to $40.22.

As of December, Wall Street sell-side analysts recommend three strong buys, six buys and four hold ratings for this stock and have established an average target price of $37.91 per share.

Disclosure: I have no positions in any securities mentioned in this article.

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About the author:

Alberto Abaterusso
I am a contributor at GuruFocus. I primarily write about how to pick potential value stocks. Gold, silver and precious metals mining industries is also my cup of tea. My articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. I hold a Master\\\'s Degree in Business Administration from Università degli Studi di Bari (Italy), Aldo Moro. I am based in The Netherlands.

You can follow me on Twitter at https://twitter.com/AAbaterusso

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