The value of stocks is a primary consideration for any investor, whether they are just starting out or a seasoned pro. That is why a figure to analyze is the Price to Sales ratio or P/S ratio, sometimes also called the PSR ratio. The formula to figure out this value is the number of shares multiplied by the price per share, then divided by the company’s total sales over the last year. The last year is defined as the previous 12 months of the fiscal year.
To evaluate which stocks to buy, consider the P/S ratio a valuable part of that decision. In general, a low P/S indicates a stock that has had a temporary decline but it highly probable that it will improve soon. Three stocks on the cheap right now, with low Price to Sales ratios, are Ingram Micro Inc. (NYSE:IM), Sony Corp (ADR) (NYSE:SNE), and C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW).
The first stock is Ingram Micro Inc. (NYSE:IM), which has a current Price to Sales ratio at 0.40. That number is lower than the 1.07 industry average. The company’s market value is at $4.25 billion and, as per last close, it had at least $26.80 per share pricing. The sales for this organization have been up over the past five years by about 8.60% typically and the growth for earnings per share is about 20.60%, holding steady.
Sony Corp (ADR) (NYSE:SNE) is the second stock on the cheap at the moment. While the company’s profit has been up by about 27.36% per year, over the past five years, it has a low P/S value. Profit is up as the sales have grown at a fast pace over those same five years. As for the low P/S ratio, it is at 0.98, which is under the industry average’s 20.35. The low for the year was $0.98.
C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) is the third stock, with a $69.84 price per share, as of last trade. That price is higher, by 0.37% just this year. Its P/S ratio is at 0.72; as with the other two stocks that is under industry average. The average in this instance is 3.69. Earnings are down -7.20% a year, average given; that is for the last five years of the company. Regarding the net income of the company, it has fallen at a rate of about -7.20%.
These are three stocks to potentially buy, given their low Prices to Sales ratios.