Pick These 5 Bargain Stocks With Impressive EV-to-EBITDA Ratios

Core Viewpoint - The article discusses the advantages of using the EV-to-EBITDA metric over the traditional P/E ratio for evaluating stock valuations and identifying potential investment opportunities. Group 1: Valuation Metrics - The P/E ratio is widely used for screening stocks and determining fair market value, but it has limitations [1] - EV-to-EBITDA is considered a more comprehensive valuation metric as it accounts for a company's total value, including debt, and provides a clearer picture of profitability by excluding non-cash expenses [2][4] - A lower EV-to-EBITDA ratio indicates a potentially undervalued stock and is particularly useful for assessing acquisition targets [5] Group 2: Limitations of P/E and EV-to-EBITDA - P/E cannot be applied to loss-making firms and is subject to accounting manipulation, while EV-to-EBITDA is less susceptible to such issues and can be used for companies with negative net earnings [6] - EV-to-EBITDA varies across industries, making it less effective for comparing companies in different sectors; it is recommended to use it alongside other ratios like P/B, P/E, and P/S for better analysis [7] Group 3: Screening Criteria for Bargain Stocks - Screening parameters include: - EV-to-EBITDA less than industry median for cheaper valuation [8] - P/E less than industry median to find discounted stocks [8] - P/B less than industry median indicating undervaluation [8] - P/S less than industry median for attractive pricing relative to sales [9] - Estimated one-year EPS growth greater than or equal to industry median [10] - Average 20-day volume greater than or equal to 50,000 for liquidity [10] - Current price greater than or equal to $5 to ensure minimum trading value [10] - Zacks Rank of 1 or 2 indicating strong buy potential [11] - Value Score of A or B for best upside potential [11] Group 4: Selected Stocks - SM Energy Company has a Zacks Rank of 1 and an expected earnings growth rate of 19.4% for 2025 [12] - Sonoco Products Company also holds a Zacks Rank of 1 with a projected earnings growth rate of 22.1% for 2025 [13] - El Pollo Loco has a Zacks Rank of 1 and an expected earnings growth rate of 14.5% for 2025 [14] - The Greenbrier Companies has a Zacks Rank of 1 and an expected earnings growth rate of 18.9% for fiscal 2025 [15] - Plains GP Holdings has a Zacks Rank of 2 with an impressive expected earnings growth rate of 100.2% for 2025 [16]