Five Cheap Stocks on the Rise

BOSTON (TheStreet) -- The stock rally has made cheap stocks harder to find, but here are five companies whose shares are positioned to gain.

5. W.W. Grainger (GWW) sells facility maintenance products.

The numbers: Third-quarter net income increased 3% to $145 million, or $1.88 a share. Revenue fell 14% to $1.6 billion. Grainger's gross margin was unchanged at 42%, but its operating margin narrowed 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 Jones Industrial Average 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 have a 1.9% dividend yield. #4 4. J.M. Smucker (SJM) 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 18, a discount to the market and packaged food peers. The shares have a 2.3% dividend yield. #3 3. Dollar Tree (DLTR) operates discount variety stores.

The numbers: Fiscal third-quarter net income increased 58% to $68 million, or 76 cents a share. Revenue grew 12% to $1.2 billion. Dollar Tree's gross margin remained steady at 38%, but its operating margin expanded from 6% to 9%. The company holds $342 million of cash and $268 million of debt.

The stock: Dollar Tree has advanced 16% this year, less than major U.S. indices. The stock trades at a price-to-earnings ratio of 15, a discount to the market and competing retailers. Dollar Tree doesn't pay dividends.#2 2. 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 60% this year, beating major U.S. indices. The stock trades at a price-to-earnings ratio of 14, a discount to the market and education peers. Lincoln doesn't pay dividends. #1 1. Church & Dwight (CHD) 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 widened 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 8% this year, lagging behind major U.S. indices. The stock trades at a price-to-earnings ratio of 18, a discount to the market, but on par with household products peers. The shares have a 0.9% dividend yield.

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