3 Stocks With Insanely Low P/S Ratios That Hedge Funds Are Bullish On

Resolute Forest Products Inc (NYSE:RFP)

17 hedge funds in our system owned Resolute Forest Products at the end of 2017, up from 13 at the end of last September. Those funds owned nearly half of the company’s shares, 46.4% to be precise, with the bulk of that amount being held by Prem Watsa’s Fairfax Financial.

The Canadian company, which has a P/S of 0.25 and a forward P/E of just 6.68, has declined by over 10% in 2018. Shares were crushed at the beginning of February when the company revealed that a shortage of truck drivers was negatively impacting the delivery of materials from its sawmills to its paper mills and increasing costs. Canada could have a truck driver shortfall of nearly 50,000 by the middle of the 2020’s according to the Canadian Trucking Alliance, as young workers steer clear of an industry that is expected to eventually be wiped out by self-driving vehicles.

Resolute Forest Products Inc (NYSE:RFP) has also been caught in the crosshairs of the seemingly endless softwood lumber battle between the U.S and Canada. The U.S Commerce Department imposed preliminary duties of up to 22.16% on uncoated groundwood paper from Canada in March.

Rayonier Advanced Materials Inc (NYSE:RYAM)

25 hedge funds in our system were shareholders of Rayonier Advanced Materials Inc (NYSE:RYAM) at the end of 2017, owning 22.1% of the company’s float. Among them was activist hedge fund Marcato Capital, helmed by Mick McGuire. McGuire more than tripled his fund’s stake in the stock during the fourth-quarter of 2017 to 1.55 million shares, which was appropriate given that at the 13D Monitor Active-Passive Investor Summit in April he stated that the stock could likewise triple in value.

Rayonier Advanced Materials Inc (NYSE:RYAM), which has a P/S of 0.66 and a trailing P/E of 2.90, completed its purchase of Tembec towards the end of 2017, which is expected to double the company’s revenue in 2018 after five years of declines. Rayonier expects to generate $155 million in EBITDA growth over the next three years thanks to the acquisition.

Disclosure: None