3 Strong Retail Stocks Sale Priced Now

06/05/2012 9:45 am EST

Focus: STOCKS

These three retail stocks are undervalued relative to earnings growth and short sellers are noticeably bailing out, potentially suggesting a bullish outlook for each, writes the staff at Kapitall.com.

Undervalued stocks based on objective numbers can offer great trading opportunities. Let’s look for a few.

We began by screening the retail sector for stocks that appear undervalued relative to earnings growth, with price-to-earnings-growth (PEG) ratios below 1.

We then screened for those with bullish sentiment from short sellers, as seen by significant decreases in shares shorted month-over-month (representing at least 2% of total-share float). This indicates that short sellers are more bullish on these names than they were a month ago.

Here are the top three results:

Hhgregg, Inc. (HGG) operates as a specialty retailer of consumer electronics, home appliances, and related services and has a market cap of $390.87 million. Its PEG ratio comes in at 0.63.

Shares shorted have decreased from 9.38 million to 9.14 million over the last month, a decrease which represents about 1.64% of the company’s total float of 14.66 million shares. It’s “days to cover” figure (the number of trading days it would take to cover all shorted shares at the current daily average) is 33.95 days.

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Medifast Inc. (MED) engages in the production, distribution, and sale of weight management and disease management products, and other consumable health and diet products in the United States. It has a market cap of $280.47 million, and the PEG ratio comes in at 0.9.

Shares shorted have decreased from 3.06 million to 2.68 million over the last month, a decrease which represents about 3.07% of the company’s total float of 12.38 million shares. It’s “days to cover” figure is 9.71 days.

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Vera Bradley, Inc. (VRA) engages in the design, production, marketing, and retail of functional accessories for women under the Vera Bradley brand and has a market cap of $886.39 million. Its PEG ratio comes in at 0.74.

Shares shorted have decreased from 10.38 million to 9.86 million over the last month, a decrease which represents about 3.59% of the company’s float of 14.48 million shares. It’s “days to cover” figure is 9.46 days.

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By the Staff at Kapitall.com

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