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The following is a list of undervalued stocks, as defined by the Price to Earnings Growth (NYSE:PEG) and Price to Free Cash Flow (P/FCF) ratios. Judging by the numbers of open call option positions relative to put option positions, it appears that options traders expect these names to see some upside over the coming weeks.

To compile this list, we started with a universe of about 80 stocks that have PEG ratios below 1.0 and P/FCF ratios below 5. We then narrowed down the list by only focusing on those stocks that have a large number of open call option positions relative to call option positions, i.e. bullish options market sentiment.

This list might offer an interesting starting point for a value-oriented investor. Full details below.

Options data sourced from Schaeffer's, valuation data sourced from Finviz.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research. Note: The numbers on top of items represent the forward P/E ratio, if available.


The list has been sorted by the Put/Call ratio.

1. Aspen Insurance Holdings Ltd. (NYSE:AHL): Property & Casualty Insurance Industry. Market cap of $2.21B. PEG ratio at 0.73, P/FCF ratio at 3.84. Call open interest at 1,520 contracts vs. put open interest at 137 contracts (Put/Call ratio at 0.09). Short float at 7.95%, which implies a short ratio of 8.87 days. The stock has gained 14.6% over the last year.

2. Protective Life Corp. (NYSE:PL): Life Insurance Industry. Market cap of $2.4B. PEG ratio at 0.71, P/FCF ratio at 2.43. Call open interest at 4,802 contracts vs. put open interest at 858 contracts (Put/Call ratio at 0.18). Short float at 3.93%, which implies a short ratio of 6.14 days. The stock has gained 71.24% over the last year.

3. Boise Inc. (NYSE:BZ): Paper & Paper Products Industry. Market cap of $686.56M. PEG ratio at 0.37, P/FCF ratio at 3.06. Call open interest at 33,177 contracts vs. put open interest at 10,873 contracts (Put/Call ratio at 0.33). Short float at 18.31%, which implies a short ratio of 9.08 days. The stock has gained 51.97% over the last year.

4. Quanex Building Products Corporation (NYSE:NX): General Building Materials Industry. Market cap of $732.94M. PEG ratio at 0.66, P/FCF ratio at 4.54. Call open interest at 880 contracts vs. put open interest at 301 contracts (Put/Call ratio at 0.34). Short float at 6.03%, which implies a short ratio of 6.47 days. The stock has gained 13.65% over the last year.

5. Advance America, Cash Advance Centers Inc. (NYSE:AEA): Credit Services Industry. Market cap of $366.06M. PEG ratio at 0.6, P/FCF ratio at 2.99. Call open interest at 464 contracts vs. put open interest at 174 contracts (Put/Call ratio at 0.38). Short float at 2.4%, which implies a short ratio of 4.06 days. The stock has gained 12.4% over the last year.

6. American Financial Group Inc. (NYSE:AFG): Property & Casualty Insurance Industry. Market cap of $3.55B. PEG ratio at 0.82, P/FCF ratio at 4.45. Call open interest at 181 contracts vs. put open interest at 69 contracts (Put/Call ratio at 0.38). Short float at 0.73%, which implies a short ratio of 1.86 days. The stock has gained 32.18% over the last year.

7. Micron Technology Inc. (NASDAQ:MU): Semiconductor Industry. Market cap of $8.24B. PEG ratio at 0.63, P/FCF ratio at 3.32. Call open interest at 457,620 contracts vs. put open interest at 180,509 contracts (Put/Call ratio at 0.39). Short float at 8.05%, which implies a short ratio of 2.34 days. The stock has lost -21.64% over the last year.

8. Cash America International, Inc. (NYSE:CSH): Credit Services Industry. Market cap of $1.11B. PEG ratio at 0.72, P/FCF ratio at 4.49. Call open interest at 2,233 contracts vs. put open interest at 935 contracts (Put/Call ratio at 0.42). Short float at 14.66%, which implies a short ratio of 19.88 days. The stock has gained 7.94% over the last year.

9. Reinsurance Group of America Inc. (NYSE:RGA): Life Insurance Industry. Market cap of $3.45B. PEG ratio at 0.82, P/FCF ratio at 4.38. Call open interest at 450 contracts vs. put open interest at 202 contracts (Put/Call ratio at 0.45). Short float at 3.28%, which implies a short ratio of 5.16 days. The stock has gained 15.26% over the last year.

10. Sonic Automotive Inc. (NYSE:SAH): Auto Dealerships Industry. Market cap of $720.8M. PEG ratio at 0.99, P/FCF ratio at 4.88. Call open interest at 2,084 contracts vs. put open interest at 1,290 contracts (Put/Call ratio at 0.62). Short float at 16.16%, which implies a short ratio of 11.68 days. The stock has gained 28.33% over the last year.

11. ITT Educational Services Inc. (NYSE:ESI): Education & Training Services Industry. Market cap of $2.07B. PEG ratio at 0.41, P/FCF ratio at 4.39. Call open interest at 37,646 contracts vs. put open interest at 26,913 contracts (Put/Call ratio at 0.71). Short float at 23.2%, which implies a short ratio of 9.2 days. The stock has lost -32.41% over the last year.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 11 Undervalued Stocks With Bullish Options Sentiment