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Heads Up! -- 4 Reasonable Value Stocks Starting To Break Out

 July 12, 2010 02:21 PM
 

Here's another "Reasonable Value" screen run against Saturday morning's Trend Busters and Trend Leaders lists. For those of you who have not see one of my previous "Reasonable Value" posts, here are the criteria for the screen (slightly tightened compared to previous posts):
  • PE between 0 and16
  • PEG between 0 and 1.2
  • Price-to-Sales less than 2
  • Debt-to-Equity less than 1
  • EV to EBITDA less than 10
Today there are four stocks that pass this screen and they're all from the Trend Busters list.

SymbolNameIndustryLast PriceMarket CapPEPEGPrice To SalesPrice To BookDebt To EquityEV to EBITDA
ENDPEndo Pharmaceuticals Holdings Inc.Major Pharma-ceuticals$23.472.729B9.570.621.831.780.21314.71
TDWTidewater Inc.Marine Transportation$41.172.135B8.130.181.810.860.11166.25
UNFUnifirst CorporationOther Consumer Services$44.63866M11.370.990.851.250.25424.9
SPRSpirit Aerosystems Holdings, Inc.Military/ Government/ Technical$21.122.972B15.830.870.691.810.54727.17


Given that all these stocks are from the Trend Busters list, it means that they have all broken out above a downward sloping trend line. Let's take a brief look at each.

This first chart is for Endo Pharmaceuticals Holdings Inc (NASDAQ: ENDP).


This stock has been on our list in the past based on a shorter-term steeper trend line. Today's trend breakout is illustrated by the blue line. You can see this breakout is definitive. Endo Pharmaceuticals makes branded and generic prescription drugs and recently acquired urological products company HealthTronics.

This next chart is for Tidewater (NYSE: TDW):


The breakout is not so dramatic on this chart. The company provides supply vessels and marine support services to the offshore energy industry. The company's operations are worldwide. Management expects a decent year but the company could be vulnerable to a moratorium on deep water drilling in the Gulf. Luckily, the company has the ability to move vessels to other busier areas. Tidewater is dependent on the energy industry which, in turn, is dependent on a resurgence in the global economy.

Our third stock is Unifirst (NYSE: UNF) and here is the chart:


This is a pretty encouraging chart as the stock has not only broken the down-trend, it has also moved above its 50-day moving average. Unifirst sells and rents uniforms and performs laundry services, etc. The financial situation is somewhat mixed. According to its last earnings report, revenues are up but income is down due to increased costs. Nevertheless, results exceeded analyst estimates and the stock popped. If the employment finally begins to improve, Unifirst will benefit.

Finally, we have Spirit Aerosystems Holdings (NYSE: SPR).


Here's another one that made a definitive move above both the trend line and the 50-day moving average. What seems to be driving this reversal is an upgrade from a UBS analyst who wrote that the aerospace supplier will benefit from production increases at Boeing Co. and stability from a new union contract.

There you have it: four stocks with promising charts and value stock characteristics.

Rich
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