Interested in finding undervalued stocks? For ideas on where to look, we ran a screen you might be interested in.
Here, we screen a universe of stocks that are trading between $1-$5 with market caps above $300 million.
We then screened for those that appear undervalued relative to EPS trends. Based on the theoretical assumption that if P/E is equal to a constant K, growth in EPS estimates should be matched by proportionate growth in price. When they don't match up, a mispricing may have occurred. We screened for those exhibiting this mismatch between changes in EPS estimate and price.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research. It appears analysts believe these stocks have more upside to price in.
Do you think these stocks should be trading higher? Use this list as a starting point for your own analysis.
1. First Bancorp (FBP): Operates as the holding company for FirstBank Puerto Rico that provides a range of financial services and products to retail, commercial, and institutional clients in Puerto Rico, the United States, and the British Virgin Islands. Market cap at $903.07M, most recent closing price at $4.38. The EPS estimate for the company's current year increased from 0.15 to 0.19 over the last 30 days, an increase of 26.67%. This increase came during a time when the stock price changed by 8.73% (from 3.78 to 4.11 over the last 30 days).
2. Nevsun Resources Ltd. (NSU): A natural resource company, together with its subsidiaries, engages in the acquisition, exploration, development, and production of mineral properties. Market cap at $789.59M, most recent closing price at $3.97. The EPS estimate for the company's current year increased from 0.67 to 0.71 over the last 30 days, an increase of 5.97%. This increase came during a time when the stock price changed by 1.74% (from 4.03 to 4.1 over the last 30 days).
3. Portugal Telecom SGPS SA (PT): Provides telecommunications services in Portugal, Brazil, and Africa. Market cap at $4.47B, most recent closing price at $4.99. The EPS estimate for the company's current year increased from 0.51 to 0.61 over the last 30 days, an increase of 19.61%. This increase came during a time when the stock price changed by 7.88% (from 4.57 to 4.93 over the last 30 days).
*EPS data sourced from Yahoo! Finance, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.