Valero and Target Look Good on The Price/Sales Ratio
Posted: July 28, 2026
July 27, 2026 (Maple Hill Syndicate) – Investors care about profits, not so much about sales. Maybe they should pay a little more attention to sales.
Two reasons:
- It’s difficult for a business to achieve profit growth unless sales are growing.
- Sales are more difficult to manipulate than profits are.
If you want to check the ratio of a stock’s price to its earnings, you use the familiar price/earnings ratio, or P/E.
Less popular, but also revealing, is the price/sales ratio, or P/S. It’s the stock price divided by sales per share.
Once a year, I write about stocks selling for attractive price-to-sales ratios. The results to date have been quite good.
Here are five stocks that look like bargains to me now, based on their P/S ratios. Each of these stocks trades for less than 1.0 times sales, some for much less.
Valero
Valero Energy Corp. (VLO) is a refiner, producing gasoline and home heating oil. Valero refines oil but — unlike big integrated companies such as Exxon Mobil or Chevron — doesn’t produce it. For Valero, oil is a raw-material cost.
That’s one reason why half the analysts who follow Valero (11 out of 22) don’t recommend the stock now. But the fact remains that Valero can get a good price at the pump for its gasoline. And you never know how the winter will go for home heating oil.
Valero stock sells for 0.74 times sales.
Target
Target Corp. (TGT) shares have lost 47% of their value in the past five years. The store has become less trendy, and the company has been whiplashed by disputes over its social and political stance.
At some points, Target supported the gay pride movement, and diversity efforts. That made conservatives mad. But it backed down from those stances, making progressives mad. Can’t win.
Critics, including Fortune magazine, say that Target should have made an outsider its chief executive instead of Michael Fiddelke, a longtime Target veteran. But Fiddelke has a turnaround plan (including remodeling more than 100 stores) and so far, customer traffic has turned up a bit.
The stock languishes at 0.59 times sales.
Andersons
Andersons Inc. (ANDE), with headquarters in Maumee, Ohio, specializes in buying, storing, moving, and selling grain and other agricultural products. Its after-tax profit margin is skimpy, recently 1.17%. Because of those thin margins, it always sells for a low P/S ratio.
Right now, the ratio is 0.24. Only four Wall-Street analysts bother to follow this mid-sized company. All four recommend it.
Macy’s
Department stores are out of fashion, and Macy’s Inc. (M) stock sells for 35% less than it did a decade ago. The P/S ratio is 0.28.
Wall Street hates this stock. Fourteen analysts cover it, but only three of them recommend it.
But is Macy’s really so bad? It has posted a profit in 14 of the past 15 years. One measure of profitability is return on equity. I consider a 15% return on equity good, and 20% excellent. Macy’s has hit the good range in 10 of the past 15 years, and excellent in eight of them.
Jones Lang
The Covid-19 epidemic knocked the stuffing out of the real-estate industry, as office space suddenly was rendered superfluous. That situation is changing, but slowly.
Jones Lang Lasalle Inc. (JLL) is a leading commercial real estate agent and service provider. Its stock is changing hands at 0.59 times sales. Shares are down about 3% this year but up 24% in the past twelve months.
Jones Lang’s sales jumped more than 11% in the past four quarters. Yet the stock’s price/sales ratio is only 0.59.
I also recommended this stock a year ago.
Performance
Before today, I’ve written 23 columns about stocks with low price/sales ratio. The average 12-month gain on my recommendations has been 29.6%.
By comparison, the Standard & Poor’s 500 Total Return Index has averaged 10.8%.
Bear in mind that my column results are hypothetical and shouldn’t be confused with results I obtain for clients. Also, past performance doesn’t predict the future.
I’ve beaten the S&P in this series only 13 times out of 23. But the margin of victory was large for the columns I wrote in 2000, 2002 and 2014.
It was also large in the past year. My picks rose 64.4%, versus 20.5% for the index. Flex Ltd. (FLEX), a contract electronics manufacturer, contributed a 139% return. CVS Health Corp. (CVS) chipped in 86%.
Archer-Daniels Midland Co. (ADM) returned 64%, Jones Lang LaSalle 28% and Mission Produce Inc. (AVO) 5%.
Disclosure: I don’t currently own the stocks mentioned today, personally or for clients. One or more clients own Exxon Mobil and Chevron.
John Dorfman is chairman of Dorfman Value Investments LLC in Boston, Massachusetts, and a syndicated columnist. His firm or clients may own or trade securities discussed in this column. He can be reached at jdorfman@dorfmanvalue.com.