- Professional stock analysts have better quality information than your average investor.
- Stocks trading at a discount to their lowest analyst target price are potentially undervalued.
- Deutsche Bank buy ratings are also a good indicator of value.
There's a lot of information out there that investors can and should evaluate when considering stocks. However, it's pretty daunting for the average person to sift through earnings releases, press releases, regulatory filings, and conference call transcripts. And that's only the documents on a company's investor relations page. There are also industry trends, competing products, pending government regulations, and numerous other factors that can affect a company's future performance.
Analysts, on the other hand, have the resources necessary to comprehensively study companies, industries, and sectors. That's why many investors use their analysis to gain a deeper understanding of potential investments. So we decided to defer to their analysis while creating the following list.
We began by screening for stocks trading at a significant discount to their lowest analyst target price. These target prices can cover quite a range, so using the most pessimistic analyst price as a proxy for fair value gives us a list of stocks that are potentially undervalued by a considerable amount.
Then we screened that group for stocks with buy ratings from Deutsche Bank. We were left with three stocks on our list.
Of the 16 analysts that have set a target price on the stock, the lowest price target stands at $35. This implies a potential upside of 12.25% from current levels around $31.18.
On January 29, 2014, Deustche Bank had a Buy rating on the stock.
2. Headwaters Inc. (HW, Kapitall snapshot): Provides products, technologies, and services in the building products, construction material, and energy industries primarily in the United States and Canada. Market cap at $934.95M, most recent closing price at $12.73.
Of the 5 analysts that have set a target price on the stock, the lowest price target stands at $15. This implies a potential upside of 17.83% from current levels around $12.73.
On January 31, 2014, Deustche Bank had a Buy rating on the stock.
Of the 6 analysts that have set a target price on the stock, the lowest price target stands at $13. This implies a potential upside of 24.52% from current levels around $10.44.
On April 7, 2014, Deustche Bank had a Buy rating on the stock.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: Kapitall is a team of analysts. This article was written by Mary-Lynn Cesar, one of our writers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.