The use of ratios to determine value stocks is not new in the investment world. Among the ratios generally used, Price-to-Sales has surfaced as an important tool to determine the value of stocks that are suffering losses or are in the early cycle of development, generating little or no profits. Though a loss-making company tends to lose investor attention with a negative Price-to-Earnings ratio, its Price-to-Sales could indicate the hidden strength in its business. This underrated ratio is also used to identify recovery situations or to ensure that a company's growth is not overvalued. Price-to-Sales is often preferred over Price-to-Earnings, as a company’s earnings are subject to accounting estimates and management manipulation but its sales figures are assumed to be relatively reliable. A stock’s Price-to-Sales ratio reflects how much investors are paying for each dollar of revenues generated by the company. If the Price-to-Sales ratio is 1, it means that investors are paying $1 for every $1 of revenues generated by the company. So it goes without saying that a stock with Price-to-Sales below 1 is a good bargain, as investors need to pay less than a dollar for a dollar’s worth. In terms of comparison, a stock with a lower Price-to-Sales ratio is more suitable for investment versus a stock with a high Price-to-Sales ratio. However, one should keep in mind that a company with high debt and a low Price-to-Sales metric is not an ideal choice. The high debt level will have to be paid off at some point, leading to further share issuance and a rise in market cap and ultimately the Price-to-Sales ratio. In any case, the Price-to-Sales ratio used in isolation can’t do the trick. One should also analyze other ratios like Price/Earnings, Price/Book, Debt/Equity before arriving at any investment decision. Screening Parameters Price to Sales less than X Industry Median: The lower the Price-to-Sales ratio, the better. Price to Earnings using F(1) estimate less than X Industry Median: The lower, the better. Price to Book (common Equity) less than X Industry Median: This is another parameter to ensure the value feature of a stock. Debt to Equity (Most Recent) less than X Industry Median: A company with less debt should have a stable Price-to-Sales ratio. Percentage Change F1 Earnings Estimate Revisions (4 Weeks) greater than zero: Upward estimate revisions add to the optimism. Current Price greater than or equal to $5: They must all be trading at a minimum of $5 or higher. Zacks Rank less than or equal to #2: Zacks Rank #1 (Strong Buy) or #2 (Buy) stocks are known to outperform irrespective of the market environment. Value Style Score equal to A: Our research shows that stocks with a Value Style Score of ‘A’ or ‘B’ when combined a Zacks Rank #1 or #2 offer the best opportunities in the value investing space. Here are five of the 15 stocks that qualified the screening: United Natural Foods Inc. (UNFI) Tutor Perini Corporation (TPC) Sinopec Shanghai Petrochemical Co. Ltd. (SHI) Kirkland's Inc. (KIRK) Carnival plc (CUK) You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge. The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your trial to the Research Wizard today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out. Click here to sign up for a free trial to the Research Wizard today. Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. Disclosure: Performance information for Zacks’ portfolios and strategies are available at: http://www.zacks.com/performance. Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report TUTOR PERINI CP (TPC): Free Stock Analysis Report SHANGHAI PETROC (SHI): Free Stock Analysis Report UTD NATURAL FDS (UNFI): Free Stock Analysis Report CARNIVAL PLC (CUK): Free Stock Analysis Report KIRKLANDS INC (KIRK): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research