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Five Boring, But Undervalued Stocks

J.M. Smucker, Silgan Holdings, Lincoln Educational Services, Church & Dwight and General Mills are rated 'buy.'
Author:

BOSTON (

TheStreet

) -- Sometimes a boring product belies an exciting growth story. Here are five cheap stocks poised to gain.

5. J.M. Smucker

(SJM) - Get J.M. Smucker Company (SJM) Report

sells jams and jellies.

The numbers

: Fiscal second-quarter net income almost tripled to $140 million as earnings per share climbed 26% to $1.18, hurt by a higher share count. Revenue grew 52% to $1.3 billion. J.M. Smucker's gross margin rose from 31% to 39%, and its operating margin jumped from 11% to 18%. Its balance sheet is liquid, with $410 million of cash. A debt-to-equity ratio of 0.3 indicates modest leverage.

The stock

: J.M. Smucker has risen 40% this year, beating major U.S. indices. The stock trades at a price-to-earnings ratio of 17, a discount to the market and food products peers. The shares have a 2.3% dividend yield.

#4>>

4. Silgan Holdings

(SLGN) - Get Silgan Holdings Inc. Report

sells metal and plastic packaging.

The numbers

: Third-quarter profit advanced 38% to $74 million, or $1.91 a share. Revenue increased 5% to $1 billion. Silgan's gross margin widened from 18% to 20%, and its operating margin stretched from 11% to 13%. The company has an adequate liquidity position, evident in its quick ratio of 1.3. Its 1.4 debt-to-equity ratio is higher-than-ideal.

The stock

: Silgan Holdings has increased 13% this year, lagging behind major U.S. indices. The stock trades at a price-to-earnings ratio of 13, a discount to the market and containers and packaging peers. The shares have a 1.4% dividend yield.

#3>>

3. Lincoln Educational Services

(LINC) - Get Lincoln Educational Services Corporation Report

TheStreet Recommends

provides career education.

The numbers

: Third-quarter profit more than doubled to $14 million, or 50 cents a share, as revenue grew 48% to $148 million. Lincoln's gross margin rose from 63% to 65%, and its operating margin increased from 10% to 16%. The company has a strong financial position, with $38 million of cash and $37 million of debt.

The stock

: Lincoln Educational Services has soared 59% this year, beating major U.S. indices. The stock trades at a price-to-earnings ratio of 14, a discount to the market and consumer services peers. Lincoln doesn't pay dividends.

#2>>

2. Church & Dwight

(CHD) - Get Church & Dwight Co., Inc. Report

sells household products.

The numbers

: Third-quarter profit soared 43% to $70 million, or 98 cents a share. Revenue inched up 2% to $646 million. Church & Dwight's gross margin rose from 43% to 49%, and its operating margin expanded from 15% to 18%. A quick ratio of 1.1 indicates adequate liquidity. A debt-to-equity ratio of 0.5 reflects conservative leverage.

The stock

: Church & Dwight has risen 6% this year, trailing major U.S. indices. The stock trades at a price-to-earnings ratio of 18, a discount to the market, but a premium to household products peers. The shares have a 0.9% dividend yield.

#1>>

1. General Mills

(GIS) - Get General Mills, Inc. (GIS) Report

sells cereal and other food products.

The numbers

: Fiscal second-quarter profit increased 50% to $566 million, or $1.66 a share. Revenue inched up 2% to $4.1 billion. The company's gross margin jumped from 33% to 46%, and its operating margin widened from 12% to 22%. A quick ratio of 0.6 reflects suboptimal liquidity. A 1.1 debt-to-equity ratio indicates a sizable debt load.

The stock

: General Mills has advanced 14% this year, less than major U.S. indices. The stock trades at a price-to-earnings ratio of 14, a discount to the market and packaged food peers. The shares have a 2.8% dividend yield.

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