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The Most Undervalued Small-Cap Service Stocks

  +Follow January 10, 2014 9:16AM
Tickers Mentioned:

The service sector often does not get the attention of some of its flashier cousins in Tech and Financials, but service stocks can offer a nice opportunity for retail investors looking for an overlooked investment opportunity. But which plays within the service sector are unjustly overlooked, and which are rightly-ignored dogs?

To find that out, we went looking for small-cap (worth between $300 million and $2 billion) service stocks that met four separate benchmarks that we felt indicated an investment poised for growth. They are:

1)      The company must have a profit-to-earnings ratio less than 15.

A low P/E indicates a company is making more money than their stock is worth. Of course, the correlation doesn’t always work out that way, but a  P/E under 15 indicates that there is a good chance that there is some undervaluation going on.

2)      The company must have a forward P/E of less than 15.

We wanted to find companies that are not just undervalued now, but look to continue to be so in the future.

3)      The company must be expected to grow EPS by at least 25 percent over the next year.

A high earnings-per-share (EPS) growth indicates that the company can be expected to become more profitable in the near future. And everyone likes to invest in companies that are expected to become more profitable.

4)      The company does not pay a dividend.

Small-cap service stocks pay a dividend because they cannot figure out how else to spend the money. Service companies, especially when they are growing, are better off spending money on advertising than on placating investors with a cash dividend.

After applying this criteria to the market, we found four small-cap service stocks we felt had a chance for experiencing growth in the coming year. They are:

VOXX International Corporation (VOXX)

Market Cap: $338.03 million

Price: $14.00

VOXX is a consumer electronics corporation based out of New York. Formerly known as Audiovox, the company manufactures commercial and consumer electronic accessories and audio equipment. While the company’s fundamentals might be string, ti should be noted that the stock dropped 17 percent on Jan. 9 on a poor earnings report.  

StealthGas Shipping (GASS)

Market Cap: $328.86 million

Price: $10.26

As their name implies, this Greek shipping company specializes in the transportation of petroleum and petrochemical gas products. The company sports an impressive forward P/E of 8.59 and yearly EPS growth of 67.37 percent.


Market Cap: $594.94 million

Price: $10.97

EZCORP is one of the largest pawn shop chains in the world, providing high-interest loans to a predominantly low income clientele. EZCORP got hammered in 2013, losing nearly half its value. However, the stock was recently upgraded by Zacks to “neutral” and sports a very impressive forward P/E of 5.98

Eros International plc (EROS)

Market Cap: $332.17 million

Price: $10.94

Eros International distributes movies from “Bollywood,” India’s fast-growing movie making sector. Eros just went public in late 2013. The service play has already attracted attention from investors looking to cash in on India’ entertainment boom. Eros sports very strong fundamentals, including an exceptional low P/E of 5.58, and an analyst consensus of “strong buy.”

Results for VOXX
Fergus Hillo
16 Apr 14 17:59:21
$VOXX 360Fly Receives Growt http://t.co/3bw6BW0bf1
16 Apr 14 10:40:02
VOXX : Electronics Launches New Time Saving Weblink Mobile FlashLogic Programmer http://t.co/U2nEYgSoEi $VOXX
Marin Calderon
16 Apr 14 09:39:33
$VOXX 360Fly Receives Growt http://t.co/sILAOUiygP
16 Apr 14 07:37:50
$VOXX 360Fly Receives Growth Capi http://t.co/Cyg7lSsQoS
Maxx Leatherby
16 Apr 14 06:17:56
$VOXX 360Fly Receives Growt http://t.co/eGnG0oOrTB
15 Apr 14 20:45:56
$VOXX chart by Emuffn3: http://t.co/kJrCMP211R VOXX Head & Shoulders.
Jaydan Gelson
15 Apr 14 17:59:26
$VOXX 360Fly Receives Growt http://t.co/nkM41JsYUt
Maksim Latimer
15 Apr 14 15:19:27
$VOXX 360Fly Receives Growt http://t.co/0KpfzHdNrb
Hendrix Halls
15 Apr 14 13:15:31
$VOXX 360Fly Receives Growt http://t.co/riVuTvHtE4
Shantae Myricky
15 Apr 14 04:20:01
$VOXX 360Fly Receives Growt http://t.co/RzPabRfWB5
Calloway Domville
14 Apr 14 20:06:01
$VOXX 360Fly Receives Growt http://t.co/szgML6snNr
Day Trade Alerts
14 Apr 14 07:31:39
via #AlertTrade SHORT Seller Alert $VOXX - VOXX INTL #ShortSeller #Stocks http://t.co/VS8RO0UwVJ
14 Apr 14 04:15:17
Voxx : Assigned Patent http://t.co/eW1fjqro2u $VOXX
Joelle Cosby
13 Apr 14 08:01:27
$VOXX 360Fly Receives Growt http://t.co/ErtjbVzRHt
Darryl Kendal
12 Apr 14 17:53:28
$VOXX 360Fly Receives Growt http://t.co/iYfPvvYNd0
Lathan Kobem
12 Apr 14 10:03:55
$VOXX 5 stocks to watch http://t.co/QnbfVnJQsj
Trystan Carson
11 Apr 14 09:06:37
$VOXX 360Fly Receives Growt http://t.co/pXIru1y3hH
Mustafa Bell
11 Apr 14 08:13:18
$VOXX 360Fly Receives Growt http://t.co/DlX6aSVDbc
Vihaan Evansall
11 Apr 14 08:10:38
$VOXX 360Fly Receives Growt http://t.co/m97ZuhEFw6
Fox Galvan
11 Apr 14 04:15:10
$VOXX 5 stocks to watch http://t.co/GCVaRpjv84
Leighton Aldaine
10 Apr 14 19:05:46
$VOXX 360Fly Receives Growt http://t.co/IPnvJKYU60
Yasmin Aguilera
10 Apr 14 16:54:21
$VOXX 360Fly Receives Growt http://t.co/BPqNNRyhRZ
Agustin England
10 Apr 14 16:26:52
$VOXX 360Fly Receives Growt http://t.co/IV5HTgf17g
Luther Kelleyva
10 Apr 14 14:59:46
$VOXX 360Fly Receives Growt http://t.co/UtwW1we18q
Blaise Jaggertar
9 Apr 14 15:51:21
$VOXX 5 stocks to watch http://t.co/BAOFr7gLRH
Yahaira Landry
9 Apr 14 14:54:33
$VOXX 5 stocks to watch http://t.co/RGyw9s5mw9
  +Follow January 10, 2014 9:16AM



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