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The following is a list of stocks in a new uptrend, as defined by the Average Directional Index, or ADX(14) index. All of these stocks are undervalued when comparing the current price to the average analyst target price (used as a proxy for fair value).

To create the list, we started with a universe of stocks in an uptrend that have an ADX(14) value above +20, which signals strengthening upward momentum. We then reduced the size of this universe by only focusing on stocks that are trading at steep discounts to the average analyst target price.

Yes, there are many limitations to this valuation approach, and there are probably several falling knives in this list. But the goal here is to give you a starting point for your own analysis. Analysts think these stocks are undervalued - what do you think?

ADX data sourced from Stockcharts.com, analyst target price and short float data sourced from Finviz.

click for expanded image

The list has been sorted by discount to average analyst target price.

1. Cohu, Inc. (COHU): Semiconductor Equipment & Materials Industry. Market cap of $326.49M. Current price at $13.77 vs. analyst target price at $22.50 (implies a discount of -38.8%). Daily ADX Line(14) at 20.56. Short float at 3.47%, which implies a short ratio of 9.53. The stock has gained 12.78% over the last year.

2. SORL Auto Parts, Inc. (SORL): Auto Manufacturer Industry. Market cap of $176.99M. Current price at $9.17 vs. analyst target price at $14.57 (implies a discount of -37.06%). Daily ADX Line(14) at 20.148. Short float at 4.02%, which implies a short ratio of 3.42. The stock has gained 32.52% over the last year.

3. China Yida Holding, Co. (CNYD): Personal Services Industry. Market cap of $200.19M. Current price at $10.24 vs. analyst target price at $15.00 (implies a discount of -31.73%). Daily ADX Line(14) at 20.562. Short float at 2.72%, which implies a short ratio of 7.32. The stock has gained 2.4% over the last year.

4. ShoreTel, Inc. (SHOR): Communication Equipment Industry. Market cap of $250.2M. Current price at $5.50 vs. analyst target price at $7.94 (implies a discount of -30.73%). Daily ADX Line(14) at 21.13. Short float at 3.26%, which implies a short ratio of 8.08. The stock has lost -16.29% over the last year.

5. AMR Corporation (AMR): Major Airlines Industry. Market cap of $2.56B. Current price at $7.67 vs. analyst target price at $10.41 (implies a discount of -26.32%). Daily ADX Line(14) at 21.186. Short float at 9.65%, which implies a short ratio of 3.42. The stock has gained 30.66% over the last year.

6. Origin Agritech Limited (SEED): Farm Products Industry. Market cap of $200.79M. Current price at $8.92 vs. analyst target price at $12.00 (implies a discount of -25.67%). Daily ADX Line(14) at 20.079. Short float at 14.26%, which implies a short ratio of 3.06. The stock has gained 77.34% over the last year.

7. Mueller Industries Inc. (MLI): Metal Fabrication Industry. Market cap of $1.11B. Current price at $29.51 vs. analyst target price at $39.00 (implies a discount of -24.33%). Daily ADX Line(14) at 20.67. Short float at 3.25%, which implies a short ratio of 8.03. The stock has gained 18.18% over the last year.

8. Wilmington Trust Corporation (WL): Regional Bank. Market cap of $693.87M. Current price at $7.58 vs. analyst target price at $9.86 (implies a discount of -23.12%). Daily ADX Line(14) at 20.121. Short float at 13.22%, which implies a short ratio of 6.92. The stock has lost -45.31% over the last year.

9. Brightpoint Inc. (CELL): Electronics Wholesale Industry. Market cap of $531.32M. Current price at $7.6 vs. analyst target price at $9.78 (implies a discount of -22.29%). Daily ADX Line(14) at 20.853. Short float at 4.44%, which implies a short ratio of 5.59. The stock has lost -7.77% over the last year.

10. America First Tax Exempt Investors LP (ATAX): Mortgage Investment Industry. Market cap of $165.06M. Current price at $5.480 vs. analyst target price at $7.00 (implies a discount of -21.71%). Daily ADX Line(14) at 20.509. Short float at 0.03%, which implies a short ratio of 0.08. The stock has gained 8.51% over the last year.

11. Delta Air Lines Inc. (DAL): Major Airlines Industry. Market cap of $10.52B. Current price at $13.33 vs. analyst target price at $17.00 (implies a discount of -21.59%). Daily ADX Line(14) at 21.254. Short float at 2.66%, which implies a short ratio of 2.34. The stock has gained 71.12% over the last year.

12. Isle of Capri Casinos Inc. (ISLE): Resorts & Casinos Industry. Market cap of $264.95M. Current price at $8.090 vs. analyst target price at $9.93 (implies a discount of -18.53%). Daily ADX Line(14) at 20.773. Short float at 9.63%, which implies a short ratio of 6.92. The stock has lost -14.03% over the last year.

13. WMS Industries Inc. (WMS-OLD): Recreational Goods Industry. Market cap of $2.43B. Current price at $41.86 vs. analyst target price at $50.87 (implies a discount of -17.71%). Daily ADX Line(14) at 20.868. Short float at 8.43%, which implies a short ratio of 5.22. The stock has lost -11.69% over the last year.

14. Mylan, Inc. (MYL): Drugs Industry. Market cap of $6.06B. Current price at $19.6 vs. analyst target price at $23.60 (implies a discount of -16.95%). Daily ADX Line(14) at 21.092. Short float at 26.21%, which implies a short ratio of 13.46. The stock has gained 22.58% over the last year.

15. GSI Commerce Inc. (GSIC): Business Services Industry. Market cap of $1.73B. Current price at $26.08 vs. analyst target price at $31.00 (implies a discount of -15.87%). Daily ADX Line(14) at 20.699. Short float at 17.26%, which implies a short ratio of 10.21. The stock has gained 24.37% over the last year.

Disclosure: No positions

Source: 15 Most Undervalued Stocks in a New Uptrend