Chicago, IL – March 13, 2025 – Stocks in this week’s article are Sanmina Corp. SANM, PagSeguro Digital PAGS, Gibraltar Industries ROCK, PRA Group PRAA and Stifel Financial Corp. SF.
Investing in stocks based on valuation metrics is considered a smart strategy. The price-to-earnings (P/E) ratio is often the go-to metric due to its simplicity and ease of use. However, the price-to-sales (P/S) ratio is more useful for evaluating stocks of companies that are unprofitable or in early growth stages, as it helps assess value when earnings are minimal or non-existent.
Sanmina Corp., PagSeguro Digital, Gibraltar Industries, PRA Group and Stifel Financial Corp. are some companies with a low price-to-sales ratio and the potential to offer higher returns.
While a loss-making company with a negative price-to-earnings ratio falls out of investor favor, its price-to-sales can indicate the hidden strength of the business. This underrated ratio is also used to identify a recovery situation or ensure a company's growth is not overvalued.
A stock's price-to-sales ratio reflects how much investors pay for each dollar of revenue generated by a company.
If the price-to-sales ratio is 1, investors are paying $1 for every $1 of revenues generated by the company. A stock with a price-to-sales below 1 is a good bargain as investors need to pay less than a dollar for a dollar's worth.
Thus, a stock with a lower price-to-sales ratio is a more suitable investment than a stock with a high price-to-sales ratio.
The price-to-sales ratio is often preferred over price-to-earnings, as companies can manipulate their earnings using various accounting measures. However, sales are harder to manipulate and are relatively reliable.
However, one should keep in mind that a company with a high debt and a low price-to-sales ratio is not an ideal choice. The high debt level will have to be paid off at some point, leading to further share issuance, a rise in market cap and a higher price-to-sales ratio.
In any case, the price-to-sales ratio used in isolation cannot do the trick. One should analyze other ratios like Price/Earnings, Price/Book and Debt/Equity before arriving at any investment decision.
Here are five of the 16 stocks that qualified the screening:
Sanmina is a global leader in integrated manufacturing solutions, offering a comprehensive range of services, including component manufacturing, product assembly, repair, logistics, and aftermarket support. With a presence across the Americas, the Asia Pacific, Europe, the Middle East and Africa, the company is recognized for its advanced technology capabilities and commitment to delivering high-quality solutions. Sanmina serves Original Equipment Manufacturers in critical industries, such as industrial, medical, defense, aerospace, automotive, communications networks and cloud infrastructure.
Committed to long-term growth, SANM continues to expand its market reach and diversify its portfolio, ensuring a balanced and resilient revenue stream. With a focus on delivering fully integrated, end-to-end solutions, Sanmina positions itself as the go-to partner for industry leaders. Looking ahead, the company remains confident in its ability to achieve sustainable growth, improve profitability and maximize shareholder value. SANM currently has a Zacks Rank #2 and a Value Score of A. You can see the complete list of today's Zacks #1 Rank stocks here.
São Paulo, Brazil-based PagSeguro Digital provides financial technology solutions and services for micro-merchants, and small and medium-sized businesses in Brazil and internationally. The company offers multiple digital payment solutions, in-person payments via point-of-sales devices and prepaid card services. PagSeguro Digital has been diversifying its payment business and 2022 marked the consolidation of its HUBs initiative to extend its best-in-class services to small and mid-sized clients.
The company's disciplined capital allocation has significantly aided operating and investing cash flow generation, positioning it to explore opportunities in payments and financial services in Brazil in the coming years. PAGS has a Value Score of A and currently flaunts a Zacks Rank #1.
Buffalo, NY-based Gibraltar Industries manufactures and distributes products to the industrial and buildings market. The products range from ventilation and expanded metal to mail storage solutions and rain dispersion products and solutions. ROCK has been benefiting from its focus on operational improvements and the Three-Pillar Strategy. The company continues to accelerate the implementation of three pillars through portfolio management initiatives, improvement of the business system and strengthening of the organization.
Gibraltar continues to accelerate its 80/20 initiatives in products and operations, optimizing the supply chain with market price actions. The company's focus on the 80/20 initiative has propelled its Residential segment's performance. Also, the high demand for agricultural facilities suggests a solid growth runway, especially for high-tech produce farms. ROCK has a Value Score of B and a Zacks Rank #2 at present.
PRA Group is a global financial and business services company in the Americas, Australia and Europe. Its primary business involves the purchase, collection and management of portfolios of nonperforming loans. The company's solid inorganic growth story, strategic initiatives and improving cash collection position it well for long-term growth. Its improving portfolio supply, with continued credit normalization in the United States and better pricing in the domestic market, are major tailwinds. A positive purchasing environment benefits the firm.
PRAA is reaping the benefits of its decision to expand its presence beyond the primary debt collection business, stepping into government collections and audit services. Strategic acquisitions boost its performance. Key moves include the acquisition of eGov Systems to strengthen its government business, along with partnerships with the IRS and Banco Bradesco S.A. PRAA has a Value Score of B and currently flaunts a Zacks Rank #1.
The Saint Louis, Missouri-based Stifel serves as the bank holding company for Stifel, Nicolaus & Company, Incorporated. It operates across banking, securities and financial services through its wholly-owned subsidiaries. The company's broker-dealer affiliates offer a range of services, including securities brokerage, investment banking, trading and investment advisory, catering to individual investors, professional money managers, businesses and municipalities.
SF remains committed to long-term growth, leveraging strategic initiatives to expand its business and enhance shareholder value. Stifel's approach includes aggressive talent acquisition, strategic reinvestments and the leveraging of its robust capital position to maximize risk-adjusted returns. Additionally, the firm remains well-positioned to capitalize on improving market conditions, increased M&A activity, and regulatory shifts favoring capital markets. SF currently has a Value Score of B and sports a Zacks Rank #1.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your trial to the Research Wizard today. And the next time you read an economic report, open up the Research Wizard, plug your finds in and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2429071/5-stocks-with-attractive-price-to-sales-ratios-for-smart-investing
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Follow us on Twitter: https://www.twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: https://www.zacks.com/
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
PRA Group, Inc. (PRAA) : Free Stock Analysis Report
Sanmina Corporation (SANM) : Free Stock Analysis Report
Stifel Financial Corporation (SF) : Free Stock Analysis Report
Gibraltar Industries, Inc. (ROCK) : Free Stock Analysis Report
PagSeguro Digital Ltd. (PAGS) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.