5 Undervalued Stocks That Are Poised for Growth in November

Core Insights - Value investors traditionally use the price-to-earnings (P/E) ratio to identify value stocks, but for loss-making companies, the price-to-sales (P/S) ratio is more relevant. The price-to-book (P/B) ratio is also a useful tool for identifying undervalued stocks with high return potential [1][5][9]. Valuation Ratios - The P/B ratio is calculated as market capitalization divided by book value of equity, helping to identify low-priced stocks with high growth prospects [2][5]. - A P/B ratio of less than one indicates that a stock is trading below its book value, suggesting it may be undervalued, while a ratio above one may indicate overvaluation [5][6]. - The P/B ratio is particularly useful for industries with tangible assets, such as finance and manufacturing, but can be misleading for companies with high R&D expenses or significant debt [8]. Book Value Definition - Book value represents the total value remaining for shareholders if a company were to liquidate its assets after settling all liabilities, calculated by subtracting total liabilities from total assets [3][4]. Screening Parameters - Stocks with a P/B ratio lower than the industry median are considered to have potential for price appreciation [11]. - Additional screening criteria include a P/S ratio below the industry median, a P/E ratio below the industry median, a PEG ratio less than 1, a current price of at least $5, an average 20-day volume of at least 100,000, and a Zacks Rank of 1 or 2 [12][13][14]. Selected Stocks - Five stocks identified with low P/B ratios and solid growth potential include: - StoneCo (STNE): Financial technology solutions provider with a projected 3-5 year EPS growth rate of 30.3% and a Zacks Rank of 2 [15]. - Great Lakes Dredge & Dock (GLDD): Largest U.S. dredging services provider with a projected EPS growth rate of 12.0% and a Zacks Rank of 1 [16]. - EnerSys (ENS): Manufacturer of industrial batteries with a projected EPS growth rate of 15.0% and a Zacks Rank of 2 [17]. - MillerKnoll (MLKN): Design solutions provider with a projected EPS growth rate of 12.0% and a Zacks Rank of 2 [17]. - Keros Therapeutics (KROS): Clinical-stage biotech with a projected EPS growth rate of 23.6% and a Zacks Rank of 1 [18].