(By Rich Bieglmeier) As we mentioned in our sector performance review
this morning, it might be hard to outperform the indexes as the market charges higher on this excursion up the mountainside. Investors could do well just tossing a few bucks in an exchange traded fund like SPDR S&P 500 (SPY) or PowerShares QQQ (QQQ).
But then iStockanalyst.com wouldn't be a source for stock ideas, now would it? So, we poured all the stocks from the emerging and bull sectors into our stock funnel to see what drips out as a potential buy candidate.
We stuffed 311 companies in and only 10 filtered through iStock's initial technical analysis "is it on the move now and can it go higher" screen. From the left thumb to right pinky, the 10 are:
AFLAC Inc. (AFL) – can't you just hear the goose AAFFFFFFLAAAAACC
CNO Financial Group, Inc. (CNO)
NTT DOCOMO, Inc. (DCM)
Leucadia National Corp. (LUK)
MeetMe, Inc. (MEET)
MYR Group, Inc. (MYRG)
Otelco Inc. (OTT)
Primoris Services Corporation (PRIM)
StanCorp Financial Group Inc. (SFG)
Windstream Corporation (WIN)
Four stocks are left to consider after lining up some of iStock's favorite fundamentals side-by-side, but like the Olympics, only one can take its place at the top of the medal stand. OK, maybe one can have a leg on the silver medal level and a part of its foot on the gold medal level.
Investors looking for a solid company with a 3% dividend could consider the runner-up StanCorp Financial Group Inc. (SFG), but the national anthem will be played for Primoris Services Corporation (PRIM).
Primoris is a specialty contractor and infrastructure company, provides a range of construction, fabrication, maintenance, replacement, water and wastewater, and product engineering services in the United States and internationally.
Although water and waste disposal didn't make our buy lists this week, the pair was in the "on pause" group we wrote about earlier today. In a way, PRIM is a three bagger already.
PRIM's chart shows a stock that traded at a 52-week high of $17.10 as recently as mid-February. It's been pretty much precipitously downhill since late March, with the stock bottoming out at $11.
Shares have started the process of recovering since hitting double pretzel sticks in the middle of May. The stock has recently busted out and could be headed for $14.5-$15.0 in the intermediate future.
Long-term wise, there is room for multiple expansion as the company trades at a few discounts to the industry average. While the rest of the sector has an average P/E of 15.78, investors can scoop up Primoris Services at 11.92 times earnings.
While we are on P/E, analysts believe the specialty construction company's profits will fatten up by 21% in 2013. With a forward P/E of 10, the company trades at a 50% discount to its projected eps growth rate. This is reflected in a PEG ratio of 0.60; meanwhile, the industry norm is nearly double at 1.19. Finally, on a price to sales basis, PRIM can be had for 31% less than its peers.
It's also nice to see a company with high insider ownership of almost 41%. That means management's financial interests are aligned with shareholders. They both get richer the same way, by the stock price heading higher.
A side-effect of management owning 4 out of 10 shares is relatively small intuitional sponsorship. Which is also good for shareholders as a vast reservoir of untapped buying potential exists. All it would take is for a few money managers to do their due diligence, and the stock could move much higher. Who knows, maybe this article will put a few on the trail to ownership.
Overall, iStock believes Primoris Services Corporation (PRIM) is in the right sector (maybe three at once) and offers a nice mix of short-term punch with long-term value.