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Alberto Abaterusso
Alberto Abaterusso
Articles (2546) 

3 Low Price-to-Median-Price-Sales Stocks to Consider

They could be bargains

January 26, 2021 | About:

Investors looking for bargains may want to consider the following three businesses, as their stocks have a low price-to-median-price-sales-value when compared to the average of the S&P 500 (which stands at 1.54 as of the writing of this article).

This approach is based on the idea that the stock valuation will revert to its historical (10-year) average in terms of the price-sales ratio. The ratio has the current share price as the numerator and the trailing twelve-month revenue per share times the 10-year median price-sales ratio as the denominator.

Wall Street is also optimistic about these companies, as sell-side analysts have issued positive recommendation ratings for them.

CarMax Inc

The first stock to consider is CarMax Inc (NYSE:KMX), a Richmond, Virginia-based retailer of used vehicles in the U.S.

CarMax Inc's price-to-median-ps-value is 1.34 as of Jan. 25, which ranks higher than 33% of companies that operate in the vehicles and parts industry.

CarMax Inc' revenue per share for the trailing twelve months ended in November 2020 stood at $113.383. CarMax Inc has a 10-Year Median price-sales ratio of about 0.7943. Thus, the median price-sales value is $90.06 as of Jan. 25.

The stock price traded at $120.96 per share at close on Monday for a market capitalization of $19.66 billion and a 52-week range of $37.59 to $124.91.

CarMax Inc does not pay dividends.

GuruFocus assigned a score of 4 out of 10 to the financial strength and of 7 out of 10 to the profitability of the company.

Wall Street recommends a median rating of overweight with an average target price of $119.42 per share for the stock.

Tractor Supply Co

The second stock to consider is Tractor Supply Co (NASDAQ:TSCO), a Brentwood, Tennessee-based retail farm and ranch store operator in the U.S.

Tractor Supply Co' price-to-median-ps-value is 1.20 as of Jan. 25, which ranks higher than 38% of companies that operate in the retail - cyclical industry.

Tractor Supply Co' revenue per share for the trailing twelve months ended in September 2020 stood at $84.392. Tractor Supply has a 10-year median price-sales ratio of 1.5383. Thus, its median price-sales value is $129.82 as of Jan. 25.

The stock price was trading at $156.14 per share at close on Monday for a market capitalization of $18.19 billion and a 52-week range of $63.89 to $160.83.

Currently, Tractor Supply pays quarterly dividends to its shareholders with the last distribution of 40 cents per common share made on Dec. 8, for a trailing 12-month dividend yield of 0.96% as of Jan. 25.

GuruFocus assigned a score of 6 out of 10 to the company's financial strength and of 9 out of 10 to its profitability.

Wall Street recommends a median rating of overweight for the stock with an average target price of $159.54 per share.

Ulta Beauty Inc

The third stock under consideration is Ulta Beauty Inc (NASDAQ:ULTA), a Bolingbrook, Illinois-based beauty retail chain company.

Ulta Beauty Inc's price-to-median-ps-value is 0.97 as of Jan. 25, which ranks higher than 53% of companies that operate in the retail - cyclical industry.

Ulta Beauty Inc's revenue per share for the trailing twelve months ended in October 2020 stood at $110.269. Ulta Beauty Inc has a 10-year median price-sales ratio of about 2.7522. Therefore, the median price-sales value is $303.48 as of Jan. 25.

The stock price was trading at $295.74 per share on Monday for a market capitalization of $16.66 billion and a 52-week range of $124.05 to $310.49.

Ulta Beauty Inc has not distributed dividends since 2012.

GuruFocus assigned a score of 6 out of 10 to the financial strength and of 9 out of 10 to the profitability of the company.

Wall Street recommends a median rating of overweight with an average target price of $302.42 per share for the stock.

Disclosure: I have no position in any security mentioned.

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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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