5 Stocks Analysts Have Overlooked

Stock opinions are suddenly scarcer on Wall Street. With Bear Stearns and Lehman Brothers laid to rest and remaining investment banks withered, fewer analysts are left to forecast company earnings and issue recommendations on whether to buy shares. The Wall Street Journal reports an epidemic of dropped coverage since September. Since most analyst coverage is favorable ― the number of "buy" calls consistently dwarfs the number of "sells" ― corporate managers worry that dropped coverage could lessen investors' enthusiasm for their shares.

For investors shopping for stocks, the news is mostly good. Screening software can help identify plenty of young companies that are growing nicely through the current recession, but which are largely being ignored by analysts -- at least, for now. Such companies might be among the first to benefit when investment banks replenish their research staffs and go hunting for new stocks to recommend.

The five companies listed below are covered by fewer than five analysts even though they have increased their sales and earnings per share by at least 10% apiece over the past year, and their shares are up nicely year to date.

Global Cash Access Holdings (GCA: 7.33, +0.44, +6.38%) earns generous fees helping casino gamblers get their hands on more cash after they've emptied their wallets. How generous are those fees? While casino partners like MGM Mirage (MGM: 6.69, +0.85, +14.55%) and Las Vegas Sands (LVS: 7.74, +0.37, +5.02%) are watching profits evaporate this year amid a travel downturn, Global Cash is expected to increase its sales by 8% and its profits by 11%. For now, the company makes most of its money operating its patented "3-in-1" cash machines. These prod customers who are denied bank withdrawals the opportunity to try their debit cards and then go for credit card advances, all in one seamless transaction (which, presumably, doesn't feel the least bit like a Central Park mugging). Global Cash also earns smaller amounts by helping casinos determine which gamblers to lend house money to, and by telling casinos which rivals their customers have withdrawn cash from in the past. Eventually, the company hopes to replace cash machines and teller windows with a cashless system whereby gamblers simply enroll their bank accounts and credit cards. Its shares trade at just nine times earnings.

Retail has taken a beating over the past year and clothing stores are among the hardest hit. One relatively small chain that operates out of strip malls in low-income neighborhoods is prospering, though. Citi Trends (CTRN: 23.45, +0.48, +2.08%) has just over 350 stores in 22 states and explains in its financial filings that it competes against fellow discounters like TJX (TJX: 30.23, -0.05, -0.16%) and Ross Stores (ROST: 37.93, -0.11, -0.28%) by "appealing to African-American consumers and offering urban apparel products." According to Oppenheimer & Company, its customers demonstrate a "high propensity to purchase apparel." The chain enjoys one of the fastest payback periods in the industry ― new stores earn back their upfront investment in about a year. Citi Trends' growth potential isn't lost on investors. Shares go for 18 times forward earnings. But the company has made a mockery of quarterly earnings estimates of late, topping them by double-digit percentages. It's also debt-free with $3 a share in cash.

America's Car-Mart (CRMT: 20.86, +1.18, +5.99%) sounds like just the sort of company for investors to avoid. However, it's benefitting from the dismal car sales seen at large dealerships over the past year. The company specializes in the low end of the used-car trade in states like Arkansas, Oklahoma and Kentucky. In the company's most recent quarter, sales at longstanding dealerships improved nearly 3% and company profits rose 8%. Management used strong cash flow to pay down debt, which stands at a modest 24% of equity. In addition, stores are requiring higher down payments on car loans vs. a year ago, and late payments and defaults are down. Shares fetch 12 times earnings.

Have a look if you like at the details on these and the other two screen survivors below.

Screen Survivors

Company	Ticker	Industry	Share Price	Price Change YTD (%)	Sales Growth Past Year (%)	Forward P/E
Citi Trends	CTRN	Clothing stores	$23.62	60	13	17.5
AZZ	AZZ	Industrial equipment	32.24	28	29	11.3
America's Car-Mart	CRMT	Used car dealerships	17.66	28	16	12.0
Global Cash Access Holdings	GCA	Credit services	6.71	202	20	9.0
Milti-Fineline Electronix	MFLX	Citcuit board manufacturing	19.94	71	25	13.0