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Stocks with Huge Upside Potential 2011

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The stocks in this article have low P/E ratios relative to their industries’ P/E and high projected EPS growth rates over the next 3 to 5 years.

One of the best ways to value a stock is to compare the stock’s P/E to the P/E of its industry. This comparison gives you a sense of how the stock is valued in relation to its peers with similar businesses. In this study, we screened for stocks that had a P/E ratio no higher than 60% of its industry’s median P/E. For example, the semiconductor industry currently has a median P/E of 17.27. Semiconductor stocks would only make the cut if they had a P/E of 10.36 or less.



Low relative P/E stocks were our starting point in this study, but we wanted to couple low P/E with potential future growth. To do this we looked at the estimated long term EPS growth rate of each stock. This growth rate is an estimate given by Wall Street analysts. It is their estimate of a stock’s annual EPS growth over the next 3 to 5 years. We set the bar at an EPS growth rate of at least 25% per year.

All of the stocks in the table below meet both criteria: low P/E ratios relative to their industry and strong future EPS growth rate estimates. While these stocks have low P/E multiples the consensus of the Wall Street analysts is that their EPS is going to grow significantly in the coming years. The table includes the stocks’ estimated 3 – 5 year EPS Growth rate, the stocks’ P/E and each stock’s industry’s P/E ratio.
Company Ticker Industry 3-5 Year Annual EPS Growth Rate Estimate Stock's P/E Industry's P/E
Noranda Aluminm NOR Metal Fabricating 108.00% 9.23 16.26
Western Refing WNR Misc. Oil 100.00% 6.87 18.88
Harvest Natural HNR Oil Exploration & Production 63.00% 12.94 21.62
Nacco Inds-Cl A NC Machinery 59.00% 7.18 15.99
Yuhe Intl Inc YUII Food 50.00% 3.15 16.65
Volkswagen-Adr VLKAY Autos 48.80% 6.83 12.71
Mitsui MITSY Metal Fabricating 48.40% 4.80 16.26
Tata Motors-Adr TTM Autos 35.00% 7.46 12.71
China Valve Tec CVVT Machinery 35.00% 3.05 15.99
Amtec Systems ASYS Semiconductors 35.00% 8.49 17.27
Axa Sa -Sp Adr AXAHY Insurance 32.10% 6.57 12.77
Kongzhong-Adr KONG Computer Software & Services 32.00% 13.75 24.90
Fortress Invest FIG Investment Banking 32.00% 7.82 14.38
China-Biotics CHBT Drugs 30.00% 4.36 15.73
Winner Med Grp WWIN Medical Products 30.00% 7.89 21.07
China Ritar Pwr CRTP Electronics 30.00% 3.56 14.88
Charm Comm-Adr CHRM Business Services 30.00% 10.04 19.15
Giant Interactv GA Computer Software & Services 29.40% 12.85 24.90
Navios Maritime NM Transportation 29.00% 6.16 19.16
Lj Intl Inc JADE Misc. Consumer Discretionary 28.00% 5.71 15.34
Ing Groep-Adr ING Insurance 27.70% 4.92 12.77
Rubicon Technol RBCN Semiconductors 26.70% 7.83 17.27
Zuoan Fashion ZA Apparel 25.00% 4.06 15.25
Hq Sustainable HQS Food 25.00% 3.39 16.65
Zoo Entertmnt ZOOG Leisure Services 25.00% 5.00 20.57
Shiner Intl Inc BEST Containers & Glass 25.00% 4.59 14.56
China Shengda CPGI Containers & Glass 25.00% 3.79 14.56
Tri-Tech Holdng TRIT Machinery 25.00% 6.50 15.99
Spreadtrum-Adr SPRD Semiconductors 25.00% 9.16 17.27
Ashford Hosptly AHT Real Estate 23.00% 6.21 15.18
Asm Intl Nv ASMI Telecom Equipment 22.60% 8.85 20.39
Longtop Fin-Adr LFT Computer Software & Services 22.50% 10.49 24.90
Tower Group Inc TWGP Business Services 22.50% 8.79 19.15
China Mediaexpr CCME Business Services 22.50% 3.91 19.15
China Xiniya Fs XNY Apparel 22.20% 5.64 15.25
Konami Corp-Adr KNM Computer Software & Services 22.20% 12.49 24.90
Northstar Rlty NRF Real Estate 22.00% 4.02 15.18
Bridgepoint Edu BPI Misc. Consumer Discretionary 21.70% 7.82 15.34
Ldk Solar Co LDK Alternative Energy 21.30% 2.77 10.89
Power-One Inc PWER Electronics 21.00% 8.63 14.88
The P/E ratios were calculated by using the current price and the estimated earnings per share of the current fiscal year. All data is as of 5/23/11.

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