I have a stock screener setup that looks for stocks with several fundamental growth characteristics combined with two technical characteristics. Here's how it looks:
- Company is profitable; ie, PE above zero
- Quarterly YoY sales growth positive
- Quarterly YoY earnings per share growth positive
- Return on Equity over 20%
- Debt to Equity ratio under 1
- Stock's performance is 5% above the S&P 500
- MACD just turned bullish
Two stocks popped up:
- Full House Resorts, Inc. (FLL) - a company in the Consumer Services-Misc. Amusement & Recreation sector
- InTest Corp. (INTT) - a company in the semiconductor automated test equipment sector
inTest specializes in the hardware that interfaces between probes and the chips being tested. It also offers thermal testing equipment including test chambers. At a market cap of $42 million, they fall into the microcap category.
The stock must be quite overlooked as it's valuation appears to be quite cheap. The PE is less than 6, Price to Sales is less than 1, Enterprise Value/EBITDA is under 5 and PEG is only 0.34. As mentioned above, the screen requires the stocks to be profitable and inTest certainly is as well as being cash flow positive.
Furthermore, the stock appears to be working on breaking out. Here is the chart:
Note the reversal above the blue trend line and the surge above the 50-day moving average in addition to the bullish move in MACD.
Though profitable, the company has been facing some financial headwinds. The following chart shows that year-over-year sales and earnings were good but the last few sequential quarters have shown declining results.
In summary, inTest is a tech stock mired in deep value territory but with its technicals turning positive. It's potential to be a takeover target make it an interesting play but it makes sense to wait a few more days until those earnings are reported.
Disclosure: no positions in any stocks mentioned in this post