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Chicago, IL – July 25, 2025 – The stocks in this week’s article are Affiliated Managers Group AMG, The Greenbrier Companies, Inc. GBX, Signet Jewelers SIG, Cognizant Technology Solutions CTSH and PagSeguro Digital PAGS.
Investing in stocks based on valuation metrics is a proven strategy for identifying opportunities with strong upside potential. While the price-to-earnings (P/E) ratio is a popular tool for gauging value, it has its limitations, especially when evaluating companies that are unprofitable or still in their early growth phases.
In such cases, the price-to-sales (P/S) ratio becomes particularly valuable. By comparing a company’s market capitalization to its revenues, the P/S ratio offers a clearer picture of value when earnings are minimal or volatile.
If you are looking for growth at a discount, low P/S stocks can offer compelling opportunities. These stocks often trade below their intrinsic value, making them attractive to investors seeking upside potential without paying a premium. While the P/S ratio alone does not guarantee success, when combined with strong fundamentals and positive business momentum, it can signal a stock poised for a breakout.
Affiliated Managers Group, The Greenbrier Companies, Inc., Signet Jewelers, Cognizant Technology Solutions and PagSeguro Digital are some companies with low price-to-sales ratios and the potential to offer higher returns.
While a loss-making company with a negative price-to-earnings ratio falls out of investor favor, its price-to-sales can indicate the hidden strength of the business. This underrated ratio is also used to identify a recovery situation or ensure a company's growth is not overvalued.
A stock’s price-to-sales ratio reflects how much investors pay for each dollar of revenue generated by a company.
If the price-to-sales ratio is 1, investors are paying $1 for every $1 of revenues generated by the company. A stock with a price-to-sales ratio below 1 is a good bargain, as investors need to pay less than a dollar for a dollar’s worth.
Thus, a stock with a lower price-to-sales ratio is a more suitable investment than a stock with a high price-to-sales ratio.
The price-to-sales ratio is often preferred over price-to-earnings, as companies can manipulate their earnings using various accounting measures. However, sales are harder to manipulate and are relatively reliable.
However, one should keep in mind that a company with high debt and a low price-to-sales ratio is not an ideal choice. The high debt level will have to be paid off at some point, leading to further share issuance, a rise in market cap and a higher price-to-sales ratio.
In any case, the price-to-sales ratio used in isolation cannot do the trick. One should analyze other ratios like Price/Earnings, Price/Book and Debt/Equity before arriving at any investment decision.
Here are five of the 20 stocks that qualified the screening:
Affiliated Managers is a global asset manager with equity investments in a large group of investment management firms or affiliates. The company has been well-poised for growth on the back of partnerships, its global distribution capability and a robust balance sheet. Its capital distributions seem sustainable. Diverse product offerings, a robust asset under management balance and global distribution capability are expected to continue driving AMG’s top line.
AMG, with its strong balance sheet and liquidity position, has considerable capability to invest in other companies and generate meaningful growth through investments. A robust liquidity position is likely to support investments in alternatives, thereby generating solid earnings. Affiliated Managers currently has a Zacks Rank #2 and a Value Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
Greenbrier is a leading international supplier of equipment and services to global freight transportation markets. The company’s broad product lineup, extensive market relationships, supportive customer experience and deep commercial origination capabilities create a unique leadership position and enable ongoing success. These factors provide revenue visibility while supporting its profitable leasing business, which is growing through disciplined investments in leased railcar fleet and robust lease renewals.
Greenbrier is progressing well on its long-term goals. Management expects a sustained financial performance amid healthy market demand. GBX currently has a Value Score of A and a Zacks Rank #2.
Hamilton, Bermuda-based Signet is a retailer of diamond jewelry, watches and other products. The company operates in the United States, Canada, the U.K., the Republic of Ireland and the Channel Islands. It is often considered to be the leading retailer of diamond jewelry. Signet continues to demonstrate strength in key jewelry segments, with bridal and fashion jewelry driving growth.
Inventory management remains a significant strength for Signet. Agile inventory management has been boosting SIG’s sales, while strategic restructuring and real estate optimization are enhancing its operational efficiency. Signet has implemented significant cost-saving initiatives, leading to a notable improvement in its financial performance.
By optimizing its real estate portfolio, SIG aims to improve sales transference across the remaining stores and enhance overall profitability. The strategic moves in real estate not only support current operational performance but also pave the way for growth as the retail landscape evolves. SIG has a Value Score of A and a Zacks Rank #2 at present.
Cognizant is a leading professional services company. The company’s services include digital services and solutions, consulting, application development, systems integration, application testing, application maintenance, infrastructure services and business process services. Cognizant is benefiting from a strong product pipeline, including a favorable mix of new opportunities. Robust organic growth, particularly in Health Sciences and Financial Services, has been a significant growth driver.
The acquisition of Belcan is bolstering CTSH’s portfolio, adding 450 basis points. An expanding clientele, driven by partnerships with companies like Docusign, OMRON and ServiceNow, is also contributing to growth. AI initiatives, including Flowsource and Neuro Edge, are enhancing productivity in software development and IT operations. CTSH currently has a Value Score of B and a Zacks Rank #2.
São Paulo, Brazil-based PagSeguro Digital offers a broad suite of financial and payment solutions tailored for consumers, individual entrepreneurs, micro-merchants, and small to mid-sized businesses across Brazil and select international markets. Its offerings include digital banking, wire transfers, tax payments, ATM access, and POS and online payment tools. With a tech-driven, integrated ecosystem, PagSeguro delivers accessible services that support daily operations and drive business growth.
PAGS is strengthening its digital banking platform, expanding services for consumers and merchants, while adjusting credit offerings to manage funding cost pressures. Its shift toward secured lending reflects a disciplined, risk-aware strategy. With a focus on innovation, sustainable growth and prudent financial management, PagSeguro is well-positioned to seize long-term opportunities in Brazil’s dynamic digital finance space. PAGS currently has a Value Score of A and a Zacks Rank #2.
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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2612991/5-bargain-price-to-sales-stocks-that-can-deliver-big-upside
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