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Do you prefer stocks trading at low share prices? If so, one thing to keep in mind is the possibility of "value traps," or stocks that appear to hold value with low share prices but in fact are trading there for a negative reason.

We decided to look for stocks that are undervalued by levered free cash flow/enterprise value. This will provide a starting point for your analysis. This ratio gives us the money that the business can use to grow and pay dividends to shareholders. Any possibility of a dividend payout nowadays is looked at positively. We also screened for stocks with a market cap of at least $300 million, and trading under $5.

Interactive Chart: Press Play to compare changes in market cap over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

Tool provided by Kapitall.

Do you think these stocks trading under $5 are a cheap bargain? Use this list as a starting point for your own analysis.

1. AK Steel Holding Corporation (NYSE:AKS): Produces flat-rolled carbon, stainless, and electrical steels, and tubular products primarily in the United States and internationally. Market cap at $497.84M, most recent closing price at $4.50. Levered free cash flow at $249.55M vs. enterprise value at $1.94B (implies a LFCF/EV ratio at 12.86%).

2. Alcatel-Lucent, S.A. (NYSE:ALU): Provides products, solutions, and transformation services that enable service providers, enterprises, governments, and strategic industries to deliver voice, data, and video communication services to end-users worldwide. Market cap at $2.59B, most recent closing price at $1.11. Levered free cash flow at $660.14M vs. enterprise value at $2.80B (implies a LFCF/EV ratio at 23.58%).

3. Central European Media Enterprises Ltd. (NASDAQ:CETV): Operates as a vertically integrated media company operating broadcast, content, and new media businesses in central and eastern European countries. Market cap at $374.37M, most recent closing price at $4.85. Levered free cash flow at $164.28M vs. enterprise value at $1.58B (implies a LFCF/EV ratio at 10.4%).

4. Crown Media Holdings Inc. (NASDAQ:CRWN): Through its subsidiary, Crown Media United States, LLC, owns and operates pay television channels in the United States and Puerto Rico. Market cap at $604.26M, most recent closing price at $1.68. Levered free cash flow at $161.37M vs. enterprise value at $1.06B (implies a LFCF/EV ratio at 15.22%).

5. Harmonic Inc. (NASDAQ:HLIT): Designs, manufactures, and sells video products and system solutions that enable service providers to deliver broadcast and on-demand services. Market cap at $472.38M, most recent closing price at $4.08. Levered free cash flow at $58.62M vs. enterprise value at $326.52M (implies a LFCF/EV ratio at 17.95%).

6. Mueller Water Products, Inc. (NYSE:MWA): Manufactures and markets a range of water infrastructure, flow control, and piping component system products for use in water distribution networks and water treatment facilities in the United States and Canada. Market cap at $779.3M, most recent closing price at $4.97. Levered free cash flow at $145.31M vs. enterprise value at $1.31B (implies a LFCF/EV ratio at 11.09%).

7. Portugal Telecom SGPS SA (NYSE:PT): Provides telecommunications services in Portugal, Brazil, and Africa. Market cap at $4.29B, most recent closing price at $4.79. Levered free cash flow at $2.44B vs. enterprise value at $14.27B (implies a LFCF/EV ratio at 17.1%).

8. Tellabs Inc. (NASDAQ:TLAB): Engages in designing and marketing equipment and services for communication-service providers in the United States and internationally. Market cap at $1.03B, most recent closing price at $2.81. Levered free cash flow at $12.05M vs. enterprise value at $105.66M (implies a LFCF/EV ratio at 11.4%).

LFCF data sourced from Yahoo! Finance, all other data sourced from Finviz.

Source: 8 Stocks Under $5 Undervalued By LFCF/EV