5 Low Price-to-Sales Picks for Investors Seeking Growth at a Bargain

Core Insights - Investing in stocks based on valuation metrics, particularly the price-to-sales (P/S) ratio, can identify opportunities with strong upside potential, especially for unprofitable or early-stage companies [1][2][10] Valuation Metrics - The P/S ratio compares a company's market capitalization to its revenues, providing a clearer picture of value when earnings are minimal or volatile [2][5] - A P/S ratio below 1 indicates a good bargain, as investors pay less than a dollar for each dollar of revenue generated [6] - The P/S ratio is preferred over the price-to-earnings (P/E) ratio due to the difficulty of manipulating sales figures compared to earnings [7][10] Investment Opportunities - Low P/S stocks can offer compelling opportunities, often trading below their intrinsic value, making them attractive for investors seeking upside potential [3][10] - Companies such as Macy's Inc. (M), California Water Service Group (CWT), Green Dot (GDOT), DiamondRock Hospitality Company (DRH), and PagSeguro Digital (PAGS) have low P/S ratios and potential for higher returns [4][10] Company Profiles - Macy's Inc. (M): Undergoing a transformation with its Bold New Chapter program, focusing on digital initiatives and omnichannel retailing. Currently has a Value Score of A and Zacks Rank 1 [12][13] - California Water Service Group (CWT): A major water utility expanding operations in the western U.S. through acquisitions, with a Value Score of B and Zacks Rank 2 [14][15] - Green Dot (GDOT): A leader in prepaid cards and Banking-as-a-Service, well-positioned for growth with a strong balance sheet. Holds a Value Score of A and Zacks Rank 1 [16][17] - DiamondRock Hospitality Company (DRH): A self-advised REIT with a diversified hotel portfolio, demonstrating balance sheet strength and disciplined capital allocation. Has a Value Score of A and Zacks Rank 2 [18][20] - PagSeguro Digital (PAGS): Offers a suite of financial solutions in Brazil, focusing on digital banking and innovation. Currently has a Value Score of B and Zacks Rank 1 [21][22]