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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
Clinton Majors
23 Apr 14 02:18:32
$VOXX 360Fly Receives Growt http://t.co/Yh4M8MR9gM
Gary Rosovsky
22 Apr 14 18:31:53
$VOXX 360Fly Receives Growt http://t.co/JWzD3cRe2g
Ahmet Lowsley
22 Apr 14 14:56:18
$VOXX 360Fly Receives Growt http://t.co/UONv5QdkaG
Ambrose Babcock
22 Apr 14 13:54:42
$VOXX 360Fly Receives Growt http://t.co/Hy9UfMvT86
Financial Alerts
22 Apr 14 13:10:51
$VOXX 360Fly Receives Growt http://t.co/qxLFL5HFPP
Thurman Holmi
21 Apr 14 12:20:33
$VOXX 360Fly Receives Growt http://t.co/zVosn2nFGJ
Thurman Holm
21 Apr 14 05:03:18
$VOXX 360Fly Receives Growt http://t.co/ikeifTSF7q
Esau Harrisonjoy
20 Apr 14 18:32:33
$VOXX 360Fly Receives Growt http://t.co/ftc1amnX6F
North Carter
20 Apr 14 14:52:27
$VOXX 360Fly Receives Growt http://t.co/OF60T6pWb4
Brick Brocky
20 Apr 14 09:48:03
$VOXX 360Fly Receives Growt http://t.co/RRBtv423A5
Louie O'Malley
19 Apr 14 14:02:23
$VOXX 360Fly Receives Growt http://t.co/k2jUrr81ld
Camilo Jarrett
19 Apr 14 13:13:12
$VOXX 360Fly Receives Growt http://t.co/GiuUDeEkbU
19 Apr 14 09:00:53
chartguy89: Stock Charts: VOXX 12.50 Stock Charts $VOXX VOXX International C http://t.co/TTAkINEpgT
19 Apr 14 08:58:40
VOXX 12.50 Stock Charts $VOXX VOXX International Corp. Cl A (NASDAQ) VOXX Stock Chart - 1 Month http://bigchar http://t.co/k09IEzwcKH
Orson Gunnero
19 Apr 14 05:09:52
$VOXX 360Fly Receives Growt http://t.co/wKDhsuhnLT
Shante Kincaid
19 Apr 14 04:18:01
$VOXX 360Fly Receives Growt http://t.co/z59Aj3wClN
Laci Jack
18 Apr 14 20:53:54
$VOXX 360Fly Receives Growt http://t.co/biXrnx1coJ
Dmitri Magnuson
18 Apr 14 16:56:58
$VOXX 360Fly Receives Growt http://t.co/iwUiLLXSnv
Basil Gall
18 Apr 14 06:34:12
$VOXX 360Fly Receives Growt http://t.co/iZrIjwDukO
18 Apr 14 03:06:09
Audiovox Corp (VOXX) 12.50 $VOXX AT&T and Audiovox Bring Connectivity to Millions M2 - Thu Apr 17, 4:47AM CDT http://t.co/Y1rFtmdHtf
Inga Chisholmz
18 Apr 14 02:55:34
$VOXX 360Fly Receives Growt http://t.co/sGPASkLnKH
Jaydan Kyler
17 Apr 14 09:00:29
$VOXX 360Fly Receives Growt http://t.co/8ShgvP6Z23
Mauro Earlaz
17 Apr 14 07:14:27
$VOXX 360Fly Receives Growt http://t.co/o3JCHDGdcG
17 Apr 14 06:30:42
$VOXX 360Fly Receives Growth Capi http://t.co/AWKwYRffzI
17 Apr 14 01:00:09
VOXX : Patent Issued for Range Extending Positive Repeater http://t.co/frhvF2cGkZ $VOXX
16 Apr 14 10:40:02
VOXX : Electronics Launches New Time Saving Weblink Mobile FlashLogic Programmer http://t.co/U2nEYgSoEi $VOXX
15 Apr 14 20:45:56
$VOXX chart by Emuffn3: http://t.co/kJrCMP211R VOXX Head & Shoulders.
Maksim Latimer
15 Apr 14 15:19:27
$VOXX 360Fly Receives Growt http://t.co/0KpfzHdNrb
  +Follow January 10, 2014 9:16AM



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