BOSTON ( TheStreet) -- Warren Buffett, Bill Miller and other value investors make money by buying cheap stocks with growth potential. Here are five cheap names you should consider:

5. Dollar Tree ( DLTR) operates discount variety stores.

The numbers: Fiscal second-quarter profit surged 51% to $57 million, or 63 cents a share, as revenue grew 12% to $1.2 billion. The company's gross margin rose from 37% to 38%, and its operating margin increased from 6% to 7%. A quick ratio of 0.8 indicates less-than-ideal liquidity. A debt-to-equity ratio of 0.2 reflects modest leverage.

The stock: Dollar Tree has advanced 18% this year, more than the Dow Jones Industrial Average, but less than the S&P 500 Index. The stock trades at a price-to-earnings ratio of 17, a discount to the market and general retailers. Dollar Tree doesn't pay dividends.

4. Consolidated Edison ( ED) sells electricity in New York, New Jersey and Pennsylvania.

The numbers: Third-quarter net income surged 83% to $339 million, or $1.22 a share, as revenue decreased 10% to $3.5 billion. Con Edison's gross margin rose from 15% to 25%, and its operating margin jumped from 10% to 19%. A quick ratio of 0.4 indicates weak liquidity. A debt-to-equity ratio of 1.1 reflects higher-than-ideal leverage.

The stock: Con Edison has climbed 42% this year, more than major U.S. indices. The stock trades at a price-to-earnings ratio of 14, indicating a discount to the market, but on par with other utilities. The shares pay a 5.7% dividend yield.

3. Casey's General Stores ( CASY) operates convenience stores in Midwestern states.

The numbers: Fiscal first-quarter revenue fell 24% to $1.2 billion, but profit grew 54% to $44 million, or 87 cents a share. The company's gross margin rose from 13% to 19%, and its operating margin jumped from 3% to 6%. The company has less-than-ideal liquidity, evident in its quick ratio of 0.8. But a debt-to-equity ratio of 0.2 indicates modest leverage.

The stock: Casey's has rallied 42% this year, beating major U.S. indices. The stock trades at a price-to-earnings ratio of 16, a discount to the market and food retailers. The shares pay a 1.1% dividend yield.

2. W.W. Grainger ( GWW) sells tools, adhesives and other industrial equipment.

The numbers: Third-quarter net income increased 3% to $145 million and earnings per share climbed 5% to $1.88. Revenue fell 14% to $1.6 billion. Grainger's gross margin was unchanged at 42%, but its operating margin declined from 13% to 12%. The company has a strong financial position, with $672 million of cash and $535 million of debt.

The stock: Grainger has risen 24% this year, beating the Dow and S&P 500. The stock trades at a price-to-earnings ratio of 17, a discount to the market and distributor peers. The shares pay a 1.9% dividend yield.

1. Lincoln Educational Services ( LINC) 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 has advanced 64% this year, beating major U.S. indices. The stock trades at a price-to-earnings ratio of 15, a discount to the market and education peers. Lincoln doesn't pay dividends.

Research the stocks in this story:
  • 5. Dollar Tree (DLTR) 4. Consolidated Edison (ED) 3. Casey's General Stores (CASY) 2. W.W. Grainger (GWW) 1. Lincoln Educational Services (LINC)
  • -- Reported by Jake Lynch in Boston.

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