Build a Winning Portfolio With These 5 Bargain Price-to-Sales Stocks

Core Insights - Investing in stocks based on valuation metrics, particularly the price-to-sales (P/S) ratio, is highlighted as a smart strategy, especially for unprofitable or early-stage growth companies [1][3] - Companies with low price-to-sales ratios, such as Advance Auto Parts, PagSeguro Digital, Gibraltar Industries, The Greenbrier Companies, and ChampionX Corporation, are identified as having potential for higher returns [2] Price-to-Sales Ratio - The price-to-sales ratio indicates how much investors pay for each dollar of revenue generated by a company, making it a useful metric for assessing value when earnings are minimal or non-existent [3][4] - A price-to-sales ratio below 1 suggests that investors are paying less than a dollar for a dollar's worth of revenue, indicating a good bargain [4] Comparison with Other Metrics - The price-to-sales ratio is often preferred over the price-to-earnings ratio due to the difficulty of manipulating sales figures compared to earnings [5] - However, it is advised to analyze other ratios such as Price/Earnings, Price/Book, and Debt/Equity in conjunction with the price-to-sales ratio for a comprehensive investment decision [6] Screening Parameters - Screening parameters for identifying suitable investments include a price-to-sales ratio less than the median for the industry, a price-to-earnings ratio below the industry median, and a price-to-book ratio that is also lower than the industry median [7][8] - A company with a debt-to-equity ratio below the industry median is preferred, as lower debt levels contribute to a stable price-to-sales ratio [8] Company Profiles - Advance Auto Parts (AAP): Engaged in the U.S. automotive aftermarket, focusing on operational efficiency and supply chain optimization. AAP has a Zacks Rank of 2 and a Value Score of A [10][11] - PagSeguro Digital (PAGS): Provides financial technology solutions for micro-merchants and small businesses, with a disciplined capital allocation strategy. PAGS has a Value Score of A and a Zacks Rank of 2 [12][13] - Gibraltar Industries (ROCK): Manufactures products for the industrial and buildings market, benefiting from operational improvements and a focus on high-demand agricultural facilities. ROCK has a Value Score of B and a Zacks Rank of 2 [14][15] - The Greenbrier Companies, Inc. (GBX): A supplier of equipment and services to global freight transportation markets, with strong revenue visibility and a Zacks Rank of 1 [16][17] - ChampionX Corporation (CHX): Specializes in chemistry solutions and advanced equipment for the energy sector, focusing on digitalization and sustainability. CHX has a Value Score of B and a Zacks Rank of 2 [17][18]