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The following is a list of undervalued stocks, as defined by the PEG ratio. All of the stocks mentioned below have PEG ratios below 1.0, which usually signal that the stock is undervalued relative to projected earnings growth.

Do these stocks offer good value at current levels? Big money managers don't seem to think so. All of these stocks have seen significant institutional outflows over the past three months.

Is this a list of value traps, or are there some diamonds in the rough? If you're a contrarian investors, this extreme pessimism might raise a flag.

PEG ratios sourced from Finviz, institutional trading data sourced from Reuters.

click for expanded image

The list has been sorted by the change in institutional ownership over the last three months.

1. Shengdatech, Inc. (OTC:SDTH): Specialty Chemicals Industry. Market cap of $328.45M. PEG ratio at 0.86. Institutional investors currently own 5,365,300 shares vs. 7,749,834 shares held three months ago (-30.77% change). Short float at 3.14%, which implies a short ratio of 5.18 days. The stock has lost -3.5% over the last year.

2. BHP Billiton plc (NYSE:BBL): Industrial Metals & Minerals Industry. Market cap of $206.65B. PEG ratio at 0.95. Institutional investors currently own 37,283,865 shares vs. 45,120,921 shares held three months ago (-17.37% change). Short float at 0.07%, which implies a short ratio of 1.15 days. The stock has gained 19.99% over the last year.

3. Sasol Ltd. (NYSE:SSL): Major Integrated Oil & Gas Industry. Market cap of $30.16B. PEG ratio at 0.97. Institutional investors currently own 20,501,554 shares vs. 24,136,725 shares held three months ago (-15.06% change). Short float at 0.1%, which implies a short ratio of 2.58 days. The stock has gained 16.29% over the last year.

4. Centrais Electricas Brasileiras S.A. (NYSE:EBR): Electric Utilities Industry. Market cap of $15.42B. PEG ratio at 0.91. Institutional investors currently own 26,670,432 shares vs. 30,101,143 shares held three months ago (-11.4% change). Short float at 0.89%, which implies a short ratio of 4.68 days. The stock has gained 8.59% over the last year.

5. Funtalk China Holdings Limited (NASDAQ:FTLK): Diversified Investments Industry. Market cap of $304.19M. PEG ratio at 0.8. Institutional investors currently own 224,177 shares vs. 248,584 shares held three months ago (-9.82% change). Short float at 0.4%, which implies a short ratio of 1.18 days.

6. Banco Santander-Chile (NYSE:SAN): Banking Industry. Market cap of $16.79B. PEG ratio at 0.86. Institutional investors currently own 31,557,837 shares vs. 34,236,936 shares held three months ago (-7.83% change). Short float at 2.58%, which implies a short ratio of 6.61 days. The stock has gained 55.75% over the last year.

7. DG FastChannel, Inc. (NASDAQ:DGIT): Business Services Industry. Market cap of $731.42M. PEG ratio at 0.83. Institutional investors currently own 25,094,650 shares vs. 27,160,362 shares held three months ago (-7.61% change). Short float at 6.95%, which implies a short ratio of 1.88 days. The stock has lost -5.06% over the last year.

8. Chimera Investment Corporation (NYSE:CIM): Property Management Industry. Market cap of $3.59B. PEG ratio at 0.79. Institutional investors currently own 572,613,450 shares vs. 614,865,248 shares held three months ago (-6.87% change). Short float at 2.29%, which implies a short ratio of 1.13 days. The stock has gained 23.78% over the last year.

9. Schweitzer-Mauduit International Inc. (NYSE:SWM): Paper & Paper Products Industry. Market cap of $1.12B. PEG ratio at 0.97. Institutional investors currently own 15,696,852 shares vs. 16,849,610 shares held three months ago (-6.84% change). Short float at 6.62%, which implies a short ratio of 8.34 days. The stock has gained 2.01% over the last year.

10. Lincare Holdings Inc. (NASDAQ:LNCR): Home Health Care Industry. Market cap of $2.54B. PEG ratio at 0.92. Institutional investors currently own 107,046,159 shares vs. 114,709,249 shares held three months ago (-6.68% change). Short float at 9.76%, which implies a short ratio of 7.76 days. The stock has gained 8.92% over the last year.

11. Veolia Environnement S.A. (NYSE:VE): Electric Utilities Industry. Market cap of $12.9B. PEG ratio at 0.81. Institutional investors currently own 9,642,618 shares vs. 10,213,604 shares held three months ago (-5.59% change). Short float at 0.26%, which implies a short ratio of 4.51 days. The stock has lost -21.96% over the last year.

12. World Acceptance Corp. (NASDAQ:WRLD): Credit Services Industry. Market cap of $735.55M. PEG ratio at 0.85. Institutional investors currently own 17,400,106 shares vs. 18,427,832 shares held three months ago (-5.58% change). Short float at 26.27%, which implies a short ratio of 20.4 days. The stock has gained 55.58% over the last year.

13. Sonic Automotive Inc. (NYSE:SAH): Auto Dealerships Industry. Market cap of $672.32M. PEG ratio at 0.92. Institutional investors currently own 33,459,456 shares vs. 35,299,684 shares held three months ago (-5.21% change). Short float at 16.65%, which implies a short ratio of 11.11 days. The stock has gained 43.21% over the last year.

14. Cameco Corp. (NYSE:CCJ): Industrial Metals & Minerals Industry. Market cap of $14.7B. PEG ratio at 0.86. Institutional investors currently own 275,893,718 shares vs. 290,004,304 shares held three months ago (-4.87% change). Short float at 1.18%, which implies a short ratio of 2.45 days. The stock has gained 26.13% over the last year.

15. Community Health Systems, Inc. (NYSE:CYH): Hospitals Industry. Market cap of $2.94B. PEG ratio at 0.81. Institutional investors currently own 88,456,182 shares vs. 92,739,241 shares held three months ago (-4.62% change). Short float at 6.11%, which implies a short ratio of 3.71 days. The stock has gained 3.68% over the last year.

16. Penske Automotive Group, Inc. (NYSE:PAG): Auto Dealerships Industry. Market cap of $1.42B. PEG ratio at 0.79. Institutional investors currently own 77,046,202 shares vs. 80,631,948 shares held three months ago (-4.45% change). Short float at 7.55%, which implies a short ratio of 7.85 days. The stock has gained 0% over the last year.

17. Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM): Semiconductor Industry. Market cap of $57.57B. PEG ratio at 0.89. Institutional investors currently own 1,061,443,459 shares vs. 1,106,453,104 shares held three months ago (-4.07% change). Short float at 0.42%, which implies a short ratio of 1.73 days. The stock has gained 10.99% over the last year.

18. W.R. Berkley Corporation (NYSE:WRB): Property & Casualty Insurance Industry. Market cap of $3.92B. PEG ratio at 0.81. Institutional investors currently own 114,307,404 shares vs. 118,999,099 shares held three months ago (-3.94% change). Short float at 6.2%, which implies a short ratio of 8.42 days. The stock has gained 11.45% over the last year.

19. Encore Capital Group, Inc. (NASDAQ:ECPG): Credit Services Industry. Market cap of $467.83M. PEG ratio at 0.9. Institutional investors currently own 23,423,903 shares vs. 24,373,802 shares held three months ago (-3.9% change). Short float at 1.38%, which implies a short ratio of 3.53 days. The stock has gained 13.4% over the last year.

20. Microsoft Corporation (NASDAQ:MSFT): Application Software Industry. Market cap of $222.79B. PEG ratio at 0.95. Institutional investors currently own 5,391,414,683 shares vs. 5,604,720,242 shares held three months ago (-3.81% change). Short float at 0.95%, which implies a short ratio of 1.15 days. The stock has lost -11.43% over the last year.

21. Strayer Education Inc. (NASDAQ:STRA): Education & Training Services Industry. Market cap of $1.82B. PEG ratio at 0.92. Institutional investors currently own 17,886,966 shares vs. 18,583,539 shares held three months ago (-3.75% change). Short float at 25.15%, which implies a short ratio of 9.1 days. The stock has lost -29.97% over the last year.

22. Dish Network Corp. (NASDAQ:DISH): CATV Systems Industry. Market cap of $8.19B. PEG ratio at 1. Institutional investors currently own 183,920,490 shares vs. 191,019,801 shares held three months ago (-3.72% change). Short float at 4.18%, which implies a short ratio of 3.43 days. The stock has lost -11.78% over the last year.

23. Xyratex Ltd. (NASDAQ:XRTX): Data Storage Devices Industry. Market cap of $481.13M. PEG ratio at 0.91. Institutional investors currently own 23,122,608 shares vs. 23,959,576 shares held three months ago (-3.49% change). Short float at 4.96%, which implies a short ratio of 2.16 days. The stock has gained 46.81% over the last year.

24. Apollo Group Inc. (NASDAQ:APOL): Education & Training Services Industry. Market cap of $5.09B. PEG ratio at 0.81. Institutional investors currently own 126,130,211 shares vs. 130,240,557 shares held three months ago (-3.16% change). Short float at 7.47%, which implies a short ratio of 2.3 days. The stock has lost -38.27% over the last year.

25. Deckers Outdoor Corp. (NYSE:DECK): Apparel Footwear & Accessories Industry. Market cap of $3.08B. PEG ratio at 0.94. Institutional investors currently own 38,201,628 shares vs. 39,402,690 shares held three months ago (-3.05% change). Short float at 11.3%, which implies a short ratio of 3.39 days. The stock has gained 153.3% over the last year.

Disclosure: No positions

Source: 25 Undervalued Stocks Being Dumped by Smart Money