15 under-valued stocks to buy on a pullback

Here's another "Reasonable Value" screen run against Tuesday's Trend Leaders list. For those of you who have not see one of my previous "Reasonable Value" posts, here are the criteria for the screen:

• PE between 0 and16
• PEG between 0 and 1.2
• Price-to-Sales less than 2
• Debt-to-Equity less than 1
• EV to EBITDA less than 10

With the market showing some strength the last week or two, we actually have a Trend Leaders list that has a reasonable number of stocks on it now - over 500, as a matter of fact. This gives us a wider field in which to seek out those stocks that still have some value characteristics while exhibiting some strong price action. The table below lists this week's candidates:

Sym bol	Name	Industry	Last Price	PE	PEG	Price To Sales	Price To Book	Debt To Equity	Cash On Hand	Divi- dend	EV to EBITDA
CACI	CACI Int'l, Inc.	EDP Services	$47.62	13.12	0.98	0.47	1.27	0.4666	174.7M	0	7.4
DOV	Dover Corp.	Industrial Machinery/ Components	$48.56	18.55	0.95	1.4	2.18	0.4383	973.5M	1.04	8.57
TSTC	Telestone Tech- nologies Corp.	Telecom Equipment	$12.10	11.66	0.17	1.61	1.82	0	10.01M	0	9.12
VSEC	VSE Corp.	Military/ Government/ Technical	$36.22	7.54	0.79	0.19	1.77	0	2.19M	0.24	3.81
ARW	Arrow Electronics, Inc.	Electronic Components	$25.40	16.3	0.43	0.19	1.01	0.4316	576.7M	0	6.93
POWL	Powell Industries, Inc.	Electrical Products	$33.01	9.11	1.01	0.63	1.44	0.075	113.6M	0	3.63
GIII	G-III Apparel Group, LTD.	Apparel	$25.48	12.45	0.64	0.58	2.1	0	17.8M	0	6.73
JACK	Jack In The Box Inc.	Restaurants	$20.89	11.6	0.81	0.49	2.14	0.6549	105M	0	5.85
CORE	Core-Mark Holding Company, Inc.	Food Distributors	$30.10	13.27	0.73	0.06	0.97	0.0021	91M	0	4.62
UNH	United Health Group Inc.	Medical Specialities	$32.42	8.19	0.91	0.38	1.39	0.3237	11B	0.5	4.35
MFB	Maidenform Brands, Inc.	Department/ Specialty Retail Stores	$24.68	13.33	1.21	1.12	3.56	0.464	22.8M	0	9.35
FDO	Family Dollar Stores, Inc.	Department/ Specialty Retail Stores	$41.41	16.46	1.19	0.7	3.84	0.1758	444.8M	0.62	7.32
FCX	Freeport-McMoran Copper & Gold, Inc.	Precious Metals	$74.03	9.42	0.73	1.96	3.16	0.4447	3,042M	1.2	4.35
HS	Health- spring, Inc.	Medical Specialities	$19.03	7.37	0.93	0.4	1.15	0.1628	294M	0	3.42
AMP	Ameriprise Financial Services, Inc.	Investment Managers	$42.82	13.58	0.85	1.31	1.09	0.7601	4.4B	0.72	8.3
ALV	Autoliv, Inc.	Auto Parts: O.E.M.	$57.78	14.29	0.25	0.78	1.94	0.2708	459.4M	1.2	5.23

Valuation measures listed in the table above show all of these stocks to be at reasonable levels. Data not included in the chart above, however, shows that two companies in particular are also showing impressive growth.

Arrow Electronics (ARW) has steadily improving financials as shown in the chart below:


Revenue, earnings and margins are all up sequentially as well as year-over-year for this distributor of electronic components and systems.

Our other growth candidate is Ameriprise Financial (AMP). I normally am not too fond of financial companies as the sector overall has been the worst performing in our Earnings Scorecard analysis. This company, however, has managed to perform reasonably well while staying far enough under the radar to maintain its value characteristics.


Here, in the chart above, we can see that the most recent sequential quarterly results were quite good on both top line and bottom line.

So why buy on a pullback?

All of these stocks have been on a tear lately, hence their inclusion on our Trend Leaders list. Our experience is that most stocks stay on the list for a week or two and then drop off. These pullbacks are often good buying opportunities as the best stocks show up on the Trend Leaders list again shortly after. For example, UnitedHealth and Family Dollar are both repeat members of the Trend Leaders.

So browse through the table above and pick a few of these stocks for your watch list. Their value characteristics should help limit any downside and their momentum characteristics should eventually yield some good price gains.

Disclosure: no positions in any of the stocks mentioned in this post