Zacks.com featured highlights: Universal Forest Products, ArcelorMittal, POSCO, SK Telecom and Korea Electric Power

For Immediate Release

Chicago, IL – May 08, 2017 - Stocks in this week’s article include Universal Forest Products Inc. (NASDAQ: UFPI – Free Report ), ArcelorMittal (NYSE: MT – Free Report ), POSCO (NYSE: PKX – Free Report ), SK Telecom Co., Ltd. (NYSE: SKM – Free Report ) and Korea Electric Power Corp. (NYSE: KEP – Free Report ).

Screen of the Week of Zacks Investment Research:

5 Low Price-to-Sales Stocks to Garner Solid Profits

A stock’s Price-to-Sales ratio reflects how much investors are paying for each dollar of revenues generated by the company.

If the Price-to-Sales ratio is 1, it means that investors are paying $1 for every $1 of revenues generated by the company. So it goes without saying that a stock with 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 more suitable for investment versus a stock with a high Price-to-Sales ratio.

While Price-to-Earnings is the first thing to cross one’s mind while using valuation metrics, Price-to-Sales has emerged as a convenient tool to determine the value of stocks that are incurring losses or are in an early cycle of development, generating meager or no profits.

Though a loss-making company with a negative Price-to-Earnings ratio falls out of investors’ favor, its Price-to-Sales could indicate the hidden strength of its business. This underrated ratio is also used to identify recovery situation or ensure that a company's growth is not overvalued.

Price-to-Sales 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 high debt and low Price-to-Sales is not an ideal choice. The high debt level will have to be paid off at some point, leading to further share issuance and a rise in market cap and ultimately a higher Price-to-Sales ratio.

In any case, the Price-to-Sales ratio used in isolation can’t do the trick. One should also analyze other ratios like Price/Earnings, Price/Book, Debt/Equity before arriving at any investment decision.

Screening Parameters

Price to Sales less than Median Price to Sales for its Industry: The lower the Price-to-Sales ratio, the better.

Price to Earnings using F(1) estimate less than Median Price to Earnings for its Industry: The lower, the better.

Price to Book (common Equity) less than Median Price to Book for its Industry: This is another parameter to ensure the value feature of a stock.

Debt to Equity (Most Recent) less than Median Debt to Equity for its Industry: A company with less debt should have a stable Price-to-Sales ratio.

Current Price greater than or equal to $5: They must all be trading at a minimum of $5 or higher.

Zacks Rank less than or equal to #2: Zacks Rank #1 (Strong Buy) or #2 (Buy) stocks are known to outperform irrespective of the market environment.

Value Style Score less than or equal to B: Our research shows that stocks with a Value Style Score of ‘A’ or ‘B’ when combined a Zacks Rank #1 or #2 offer the best opportunities in the value investing space.

Here are five of the 22 stocks that qualified the screening:

Universal Forest Products Inc. (NASDAQ:UFPI – Free Report ) engineers, manufactures, treats, distributes and installs lumber, composite wood, plastic and other building products. The stock currently has a Zacks Rank #2 and a Value score of ‘B’. Also, the 3–5 year EPS growth rate for the stock is estimated at 10%.

Luxembourg-based ArcelorMittal (NYSE: MT – Free Report ) 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 both the developed and developing world. This Zacks Rank #1 company has a 3–5 years EPS growth rate of 11.5% and a Value score of ‘A.’

POSCO (NYSE:PKX – Free Report ) is a producer and seller of steel rolled products and plates in South Korea and internationally. It has a 3–5 year EPS growth rate of 5%. The stock currently has a Value score of ‘A’ and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

SK Telecom Co., Ltd. (NYSE:SKM – Free Report ) is a provider of wireless telecommunications services in South Korea. The company offers wireless voice transmission services, cellular global roaming services, and interconnection services to connect its networks to fixed-line and other wireless networks. This Zacks Rank #1 company’s 3–5 year EPS growth rate is pegged at 0.05%. The stock has a Value score of ‘A’.

Korea Electric Power Corp. (NYSE:KEP – Free Report ), also known as KEPCO, is an integrated electric utility engaged in the generation, transmission, distribution of electricity and development of electric power resources in South Korea. This Zacks Rank #2 company’s 3–5 year EPS growth rate is pegged at 5%. The stock has a Value score of ‘A.'

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Universal Forest Products, Inc. (UFPI): Free Stock Analysis Report
 
ArcelorMittal (MT): Free Stock Analysis Report
 
POSCO (PKX): Free Stock Analysis Report
 
SK Telecom Co., Ltd. (SKM): Free Stock Analysis Report
 
Korea Electric Power Corporation (KEP): Free Stock Analysis Report
 
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