James Dennin, Kapitall: Looking ahead to earnings reports this week, we found some lesser-known stocks that might be worth considering. 

Earnings season is starting to ramp into full gear, with high-profile announcements from Netflix (NFLX), Proctor & Gamble (PG) and a number of others earnings reports this week.

[Read more on earnings season from Kapitall: 5 Tech Stocks to Watch after Earnings Warnings]

Parts of the financial sector are likely reeling from the announcement of JPMorgan's (JPM) record-breaking settlement, coupled with its first quarterly loss in almost a decade. But the market overall has much to look forward too, as many broad economic indicators from recent weeks have been pretty positive. 

Consumer sentiment remained unshaken by the government shutdown. And the stock market actually performed decently well throughout the whole ordeal, in no small part due to the announcement of Janet Yellen's appointment as the next Federal Reserve Chair.

Still, everyone is going to have an eye on the latest earnings and revenue reports for the most recent quarter.

This week alone, hundreds of companies are reporting their earnings. Earnings week is the most volatile time of the year for the stock market, as a single report can have a huge effect on a company's stock price.

Part of this has to do with intensified media coverage, but part of it also stems from institutional activity. Earnings season is often when institutional investors will re-evaluate their positions in certain companies. All this extra activity can often translate into a lot more movement. 

Investing ideas

We decided to run a screen on stocks with earnings reports this week, in case our readers are looking to ride the wave of fall earnings. Among an initial universe of almost 300 stocks reporting this week, we wanted to look for signs of increasing profitability, and also possible signs of companies that are undervalued. 

First we considered  sales growth quarter-over-quarter, which looks at how much the company added to sales in the past three months. Then we looked for signs that these stocks have performed well for investors – by looking at the return on investment (ROI) - which measures how good a company is at generating profits for investors.

Next, we looked at price-to-equity ratios (P/E), which measures how expensive each dollar of equity is for investors. This is a possible indicator that a company is undervalued, although P/E ratios vary industry to industry.

And to finally narrow down our list even more, we looked for companies with low debt levels, an indicator of long-term health, as indicated by the long-term debt to equity ratio (LTDebt/Equity). 

We were left with 4 stocks on our list. 

Click on the interactive chart below to see data over time. 

Do you see investment opportunities during earnings season? Use the list below as a starting point for your own analysis. 

1. Diamond Hill Investment Group Inc. ( DHIL): Sponsors, markets, and provides investment advisory and related services to individual and institutional investors in the United States. Market cap at $363.13M, most recent closing price at $111.80.

Sales Growth Qtr/Qtr: 22.8%

P/E: 18.72

ROI: 70%

LTDebt/Equity: 0.00.

Earnings: October 24. 


2. Heritage Financial Group, Inc. ( HBOS): Operates as the holding company for HeritageBank of the South that provides retail and commercial banking services in southwest Georgia and north central Florida. Market cap at $130.72M, most recent closing price at $17.71.

Sales Growth Qtr/Qtr: 49.6%

P/E: 12.26

ROI: 32%

LTDebt/Equity: 0.00.

Earnings: October 24. 


3. United Therapeutics Corporation ( UTHR): Engages in the development and commercialization of therapeutic products for patients with chronic and life-threatening diseases in the United States and Internationally. Market cap at $4.08B, most recent closing price at $81.90.

Sales Growth Qtr/Qtr: 24.4%

P/E: 14.18

ROI: 20.8%

LTDebt/Equity: 0.06.

Earnings: October 24. 


4. USANA Health Sciences Inc. ( USNA): Develops, manufactures, distributes, and sells nutritional and personal care products worldwide. Market cap at $1.16B, most recent closing price at $86.01.

Sales Growth Qtr/Qtr: 17.5%

P/E: 18.72

ROI: 35.7%

LTDebt/Equity: 0.00.

Earnings: October 22. 



( List compiled by James Dennin, a Kapitall Writer. Quarterly sales sourced from Zacks Investment Research, all other data sourced from Finviz.)