Jensen: Two Cheap Stocks with Growing Prospects
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- Consensus earnings estimates for 2012 have moved up 1% over the last three months. Consensus projections for 2013 have moved up 3% over the same time span and now stand at $3.09 a share. The company has beat estimates each of the last three quarters.
- USTR is selling at less than 9x forward earnings, a discount to its five-year average (11.9), and the stock provides a 1.9% dividend yield.
- The company managed to raise earnings at better than a 5% annual clip over the last five years despite the economy and the challenges in the office supply market. USTR sports a low five-year projected price/earnings/growth ratio (0.73), and it is expected to have sales growth of 3% to 4% for 2012 and 2013.
- The five analysts covering the stock have price targets that range between $32 and $57 a share. The stock was above $34 a share earlier in the year.
- Consensus earnings estimates for 2013 have improved some 8% over the past three months. The company also has easily beaten earnings estimates each of the last six quarters.
- NCR is selling for less than 8.5x forward earnings, a solid discount to its five-year average (13.9).
- The median price target for the nine analysts covering the stock is $28 a share. RBC Capital initiated the shares with an Outperform rating in May and J.P. Morgan pushed its price target up to $30.50 from $28 in the second quarter.
- NCR has good growth prospects. Analysts expect 6% to 9% annual sales growth over the next two years and the company has a five-year projected PEG of less than 1 (.64).
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