6 Bargain Stocks With Strong Returns

Stocks with strong profitabilty, wide margins of safety and acceptable PE ratios

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Sep 07, 2016
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The following stocks are trading with wide margins of safety, according to the DCF calculator, and some of them have very low price-earnings (P/E) ratios. GuruFocus' All-in-One Screener can be used to find similar stocks.

Credit Acceptance Corp. (CACC) has a market cap of $3.96 billion and a GuruFocus business predictability of 5/5 stars. The stock has a price of $194.61 with a P/E ratio of 12.87 and, according to the DCF calculator, is trading with a margin of safety of 55%, since its fair value is $430.44. During the last 12 months, the price of the stock has dropped by 4% and is now 24.74% below its 52-week high and 22.07% above its 52-week low.

The company offers automobile dealers financing programs that enable them to sell vehicles to consumers regardless of their credit history.

Its profitability and growth is rated 9/10 with ROE of 32.75% and ROA of 8.89% that are ranked higher than 85% of other companies in the Global Credit Services industry.

The largest shareholder among the gurus is Seth Klarman (Trades, Portfolio) with 0.49% of outstanding shares, followed by Mario Gabelli (Trades, Portfolio) with 0.02%, Murray Stahl (Trades, Portfolio) with 0.01% and Paul Tudor Jones (Trades, Portfolio) with 0.01%.

Itau Unibanco Holding SA ADR. (ITUB) has a market cap of $101.87 billion and a GuruFocus business predictability of 2/5 stars. The stock has a price of $11.56 with a P/E ratio of 8.31 and, according to the DCF calculator, is trading with a margin of safety of 29%, since its fair value is $16.17. During the last 12 months, the price of the stock has risen by 65% and is now 110.95% above its 52-week low.

The company provides financial products and services in Brazil. It provides investment banking, consumer credit card, real estate financing, leasing, foreign exchange and foreign trade financing services.

Its profitability and growth is rated 8/10 with ROE of 21.18% and ROA of 1.91% that are ranked higher than 84% of other companies in the Global Banks - Regional - Latin America industry.

Howard Marks (Trades, Portfolio) is the largest shareholder of the company among the gurus, with 0.08% of outstanding shares, followed by John Griffin (Trades, Portfolio) with 0.04%, Jim Simons (Trades, Portfolio) with 0.02%, Jeremy Grantham (Trades, Portfolio) with 0.01% and John Rogers (Trades, Portfolio) with 0.01%.

Polaris Industries Inc. (PII) has a market cap of $5.35 billion and a GuruFocus business predictability of 2.5/5 stars. The stock has a price of $83.52 with a P/E ratio of 14.53 and, according to the DCF calculator, is trading with a margin of safety of 49%, since its fair value is $162.9. During the last 12 months, the price of the stock has dropped by 37% and is now 37.94% below its 52-week high and 23.19% above its 52-week low.

The company designs, engineers and manufactures off-road vehicles, which includes all terrain vehicles and side-by-side vehicles for recreational and utility use, snowmobiles and motorcycles.

Its profitability and growth is rated 8/10 with ROE 41.20% and ROA of 16.47% that are ranked higher than 94% of other companies in the Global Recreational Vehicles industry.

The largest shareholder among the gurus is Columbia Wanger (Trades, Portfolio) with 0.98% of outstanding shares, followed by Ken Fisher (Trades, Portfolio) with 0.34%, Meridian Funds (Trades, Portfolio) with 0.23%, Steven Cohen (Trades, Portfolio) with 0.16% and Jim Simons (Trades, Portfolio) with 0.15%.

Net 1 UEPS Technologies Inc. (UEPS) has a market cap of $525.12 million. The stock has a price of $9.7 with a P/E ratio of 5.63 and, according to the DCF calculator, is trading with a margin of safety of 47%, since its fair value is $18.41. During the last 12 months, the price of the stock has dropped by 48% and is now 49.84% below its 52-week high and 14.93% above its 52-week low.

The company provides payment solutions and transaction processing services across multiple industries. The Company also provides financial services along with hardware solutions.

Its profitability and growth is rated 8/10 with ROE of 17.46% and ROA of 7.11% that are ranked higher than 70% of other companies in the Global Business Services industry.

Charles de Vaulx (Trades, Portfolio) is the largest shareholder of the company among the gurus, with 5.36% of outstanding shares, followed by IVA International Fund (Trades, Portfolio) with 4.19%, Jim Simons (Trades, Portfolio) with 2.6%, Jeremy Grantham (Trades, Portfolio) with 0.47% and Paul Tudor Jones (Trades, Portfolio) with 0.05%.

Nicholas Financial Inc. (NICK) has a market cap of $81.5 million and a GuruFocus business predictability of 3.5/5 stars. The stock has a price of $10.48 with a P/E ratio of 7.14 and, according to the DCF calculator, is trading with a margin of safety of 46%, since its fair value is $19.43 During the last 12 months, the price of the stock has dropped by 20% and is now 22.57% below its 52-week high and 5.65% above its 52-week low.

The company, through its subsidiaries, is engaged in acquiring and servicing contracts for purchases of new and used automobiles and light trucks, as well as makes direct loans and sells consumer-finance related products.

Its profitability and growth is rated 8/10 with ROE of 11.42% and ROA of 3.60% that are ranked higher than 63% of other companies in the Global Credit Services industry.

The largest shareholder among the gurus is Jim Simons (Trades, Portfolio) with 6.51% of outstanding shares.

Sturm Ruger & Co Inc. (RGR) has a market cap of $1.14 million and a GuruFocus business predictability of 3/5 stars. The stock has a price of $60.16 with a P/E ratio of 15.29 and, according to the DCF calculator, is trading with a margin of safety of 46%, since its fair value is $111.88. During the last 12 months, the price of the stock has dropped by 4% and is now 22.96% below its 52-week high and 25.07% above its 52-week low.

The company is engaged in the design, manufacture and sale of firearms to domestic customers. It also manufactures and sells investment castings made from steel alloys for internal use in the firearms segment.

Its profitability and growth is rated 9/10 with ROE of 33.14% and ROA of 24.16% that are ranked higher than 90% of other companies in the Global Aerospace & Defense industry.

Jim Simons (Trades, Portfolio) is the largest shareholder of the company among the gurus, with 1.95% of outstanding shares, followed by Joel Greenblatt (Trades, Portfolio) with 0.15%, Paul Tudor Jones (Trades, Portfolio) with 0.03% and Mairs and Power (Trades, Portfolio) with 0.02%.

Disclosure: I do not own any shares of any stocks mentioned in this article.

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