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The Most Undervalued Small-Cap Service Stocks

  +Follow January 10, 2014 9:16AM
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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.

EZCORP, INC. (EZPW)

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.”

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for VOXX
Jonathan Nox
22 Dec 14 12:14:47
@super_trades @profitly how much did you lose on $VOXX?
TickerChirp
21 Dec 14 08:32:04
The Top in Twitter About $VOXX (Voxx International Corp symbol VOXX) on 12/21/2014 http://t.co/0x5cqCGV0Y
Maleah
19 Dec 14 23:10:21
RT @BargainTrapper: http://t.co/ZQjf9WpOs3 <- A decent informational video from millionaire trader Tim Sykes $VSR $VOXX $APT $LAKE $SIMH $I…
Malia B
19 Dec 14 23:09:14
http://t.co/ZQjf9WpOs3 <- A decent informational video from millionaire trader Tim Sykes $VSR $VOXX $APT $LAKE $SIMH $IBIO
Day Trade Alerts
19 Dec 14 08:37:44
via #AlertTrade 5-min Candle Alert $VOXX - VOXX INTL #daytrader #stocks http://t.co/VS8RO1tb5N
PennyStock Zone
17 Dec 14 12:46:27
RT @BargainTrapper: http://t.co/ZQjf9WpOs3 <- A decent informational video from millionaire trader Tim Sykes $VSR $VOXX $APT $LAKE $SIMH $I…
Malia B
17 Dec 14 12:43:17
http://t.co/ZQjf9WpOs3 <- A decent informational video from millionaire trader Tim Sykes $VSR $VOXX $APT $LAKE $SIMH $IBIO
Sara Hathaway
17 Dec 14 10:36:11
RT @readymaker: VOXX Champ Line of Emergency-Preparedness Gear http://t.co/xWZ8RKnScP $VOXX
StockNewsWires
17 Dec 14 07:44:03
$VOXX: VOXX International Corp Stock Rating Upgraded by Zacks (VOXX) http://t.co/v6SXHCGIui http://t.co/62VBYy7GLE
Ticker Report
17 Dec 14 07:43:36
VOXX International Corp Stock Rating Upgraded by Zacks $VOXX http://t.co/MMN3uqcIUJ
prepped
16 Dec 14 12:12:20
VOXX Champ Line of Emergency-Preparedness Gear http://t.co/xWZ8RKnScP $VOXX
WKRB News
16 Dec 14 09:39:54
VOXX International Corp Upgraded by Zacks to “Neutral” $VOXX http://t.co/2HF3pkI9Ti
Russell Barbour
16 Dec 14 03:25:07
RT @BargainTrapper: http://t.co/ZQjf9WpOs3 <- A decent informational video from millionaire trader Tim Sykes $VSR $VOXX $APT $LAKE $SIMH $I…
Malia B
16 Dec 14 03:18:15
http://t.co/ZQjf9WpOs3 <- A decent informational video from millionaire trader Tim Sykes $VSR $VOXX $APT $LAKE $SIMH $IBIO
Russell Barbour
15 Dec 14 14:12:46
http://t.co/fzlHMp1q5x <- A decent informational video from millionaire trader Tim Sykes $VSR $VOXX $APT $LAKE $SIMH $IBIO
InterCooler
15 Dec 14 12:08:34
VOXX International Corp Stock Rating Upgraded by Zacks $VOXX http://t.co/yALRjYvhZK
ProVesting
15 Dec 14 12:08:06
$VOXX: VOXX International Corp Stock Rating Upgraded by Zacks (VOXX) http://t.co/SIsBXBwBvY http://t.co/Xw05ZSlEKE
US Banking News
15 Dec 14 11:43:53
VOXX International Corp Stock Rating Upgraded by Zacks $VOXX http://t.co/NuNcgafkvl
StockNewsWires
15 Dec 14 11:39:05
$VOXX: VOXX International Corp Upgraded to "Neutral" at Zacks (VOXX) http://t.co/BZCIrDfITa http://t.co/5bPyZGLYj6
Sleek Money
15 Dec 14 11:37:44
VOXX International Corp Upgraded to “Neutral” at Zacks $VOXX http://t.co/XU77rjpuXD
US Consumer News
15 Dec 14 11:19:25
VOXX International Corp upgraded by Zacks to neutral. $8.20 PT. http://t.co/65KsMpHciX $VOXX #VOXX
Media Sentiment
15 Dec 14 11:15:07
$VOXX received a new alert. Find out why at http://t.co/5lwmDm2SCs #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 328
Analyst Ratings
15 Dec 14 11:13:21
VOXX International Corp upgraded by Zacks to neutral. $8.20 PT. http://t.co/jm7E443oo8 $VOXX #VOXX
Daily Contracts
15 Dec 14 10:08:01
Real-Time feed of company contracts, original agreements and executive updates from Voxx International $VOXX http://t.co/rjMVRFueLK
				
				
  +Follow January 10, 2014 9:16AM
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