If you consider yourself a value investor, here are some ideas to get started on your stock search.
We ran a screen on stocks that have had positive performance quarter-to-quarter for those that still appear undervalued, with PEG below 1 and Price to Free Cash Flow ratios below 15.
We further filtered the stocks for those with significant net institutional purchases over the last quarter, representing at least 5% of share float. This indicates that institutional investors such as hedge fund managers and mutual fund managers expect these names to outperform into the future.
Interactive Chart: Press Play to compare changes in 1-year return over the past two years:
Do you think institutions are right about buying these undervalued, and profitable stocks? We recommend you do your own analysis by starting with the list here.
1. Kimball International, Inc. (KBALB): Manufactures and sells electronic assemblies and furniture in the United States and internationally. Market cap at $463.81M, most recent closing price at $12.30. Net institutional purchases in the current quarter at 2.4M shares, which represents about 8.36% of the company's float of 28.70M shares. As of September 30th, 2012, the top 2 holders of the stock are Donald Smith & Co. and The Vanguard Group.
PEG at 1.00, P/FCF at 10.97, and EPS growth next 5 years at 28%.
2. Kohlberg Kravis Roberts & Co. (KKR): A private equity and venture capital firm specializing in acquisitions, leveraged buyouts, management buyouts, and mezzanine investments in large cap companies. Market cap at $3.78B, most recent closing price at $15.56. Net institutional purchases in the current quarter at 21.5M shares, which represents about 9.89% of the company's float of 217.44M shares. As of September 30th, 2012, the top 2 holders of the stock are Lexington Partners VI Holdings and Morgan Stanley.
PEG at 0.16, P/FCF at 1.09, and EPS growth next 5 years at 47%.
3. Select Medical Holdings Corporation (SEM): Select Medical Holdings Corporation, through its subsidiary, Select Medical Corporation, operates specialty hospitals and outpatient rehabilitation clinics in the United States. Market cap at $1.39B, most recent closing price at $9.82. Net institutional purchases in the current quarter at 3.9M shares, which represents about 8.68% of the company's float of 44.93M shares. As of September 30th, 2012, the top 2 holders of the stock are T. Rowe Price and California State Teachers Retirement System.
PEG at 0.88, P/FCF at 6.68, and EPS growth next 5 years at 11%.
4. USANA Health Sciences Inc. (USNA): Develops, manufactures, distributes, and sells nutritional and personal care products worldwide. Market cap at $504.18M, most recent closing price at $35.09. Net institutional purchases in the current quarter at 1.4M shares, which represents about 21.94% of the company's float of 6.38M shares. As of September 30th, 2012, the top 2 holders of the stock are FMR, LLC and LSV Asset Management.
PEG at 0.54, P/FCF at 7.06, and EPS growth next 5 years at 16%.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
