One of my favorite investment tools is the Value Line Investment Survey, a weekly independent publication that analyzes over 3,000 stocks considered part of the Value Line universe. Value Line is effective because they give you the facts along with their independent analytical viewpoint. Value Line provides a one page snapshot of each company it covers including 10 years of financials and performance metrics. It's a wonderful place to begin the quest for investment ideas.
IN PICTURES: 5 Tips To Reading The Balance Sheet
Taking It A Step Further
Value Line goes a step further and creates its own stock screens within its universe of stocks. One of my favorites, for obvious reasons, is the bargain basement stocks screen. Needless to say, the list is not as attractive as it once was, but that's because the S&P is up over 100% from its lows of March 2009. Still, whatever names appear on the list are certainly worth a closer look. (For more, see How Investors Can Screen For Stock Ideas.)
Ingram Micro (NYSE:IM) is a distributor of computer products and services. The balance sheet shows no net debt and shares trade for less than 9 times forward earnings. At $19 a shares, the shares are in line with per share book value of $19.73. After a terrible 2009, Ingram's operations improved significantly in 2010. Continued growth in IT spending in 2011 would be a likely catalyst for more growth. Ingram offers its products and services in over 100 countries. (For more, see Understanding Book Value.)
A Diverse Few
Also among the shrinking list of names is auto parts supplier Standard Motor Products (NYSE:SMP), a small cap supplier of replacement parts in the US, Canada, and Latin America. The company has been in business for nearly 100 years. Shares were up around an impressive 52% in 2010, but significantly below Motor Car Parts (Nasdaq:MPAA) which was up nearly 150% in 2010. Recently, auto parts manufacturers and retailers have sold off on news that new car sales are picking up. Continued selling pressure could create an attractive buying point, especially if you believe that more people are going to hold on to their vehicles longer.
Pharmaceutical company Forest Labs (NYSE:FRX) shows up on the list if for no other reason that its impeccable balance sheet. Shares trade for $32 against $12 in cash per share. The forwards earnings multiple is less than 8 and profit margins are 15%. While the company's top selling drug Lexapro is soon coming off patent, Forest has a deep pipeline of potential candidates, several of which are close to commercial success. (For more, see Forest Labs' Oh-So Healthy Balance Sheet.)
Don't expect to find ample opportunity today if you are looking for deep value stocks, especially here in the United States. But the market occasionally manages to leave a few ideas worthy of further investigation. Sources such as Value Line and other good stock screens are great places to check regularly.
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!