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The following is a list of stocks that are trading at a Price to Free Cash Flow (P/FCF) ratio lower than 5. In other words, these stocks appear to be undervalued, with free cash flow making up more than 20% of each company's overall valuation.

Additionally, all of these stocks have seen consecutive net institutional buying for the last two quarters.

These companies appear to be undervalued by their low P/FCF Ratio and have caught the eye of institutional investors. Is this the time for you to step in and consider some of these names for your own portfolio? Full details below.

Institutional and mutual fund data sourced from Fidelity, all other data sourced from Finviz.

Click for expanded images

List sorted by relative change in net institutional flows.

1. Global Ship Lease, Inc. (GSL): Shipping Industry. Market cap of $360.46M. Price/Free Cash Flow at 4.56. Net institutional shares bought during the current quarter at 1.0M vs. 63.2K net shares purchased during the previous quarter (x157.23 increase). The stock has gained 169.11% over the last year. 



2. AOL, Inc. (AOL): Internet Information Providers Industry. Market cap of $2.05B. Price/Free Cash Flow at 4.13. Net institutional shares bought during the current quarter at 2.4M vs. 281.0K net shares purchased during the previous quarter (x84.41 increase). The stock is a short squeeze candidate, with a short float at 9.61% (equivalent to 7.75 days of average volume). Also note that the stock is currently stuck in a downtrend, trading -8.18% below its SMA20, -15.06% below its SMA50, and -18.1% below its SMA200.

3. KeyCorp (KEY): Money Center Banks Industry. Market cap of $7.90B. Price/Free Cash Flow at 3.31. Net institutional shares bought during the current quarter at 12.5M vs. 2.0M net shares purchased during the previous quarter (x5.25 increase). Relatively low correlation to the market (beta = 0.72), which may be appealing to risk averse investors. The stock has gained 19.12% over the last year. 



4. First Horizon National Corp. (FHN): Regional Bank. Market cap of $2.93B. Price/Free Cash Flow at 4.27. Net institutional shares bought during the current quarter at 29.4M vs. 6.5M net shares purchased during the previous quarter (x3.52 increase). The stock is a short squeeze candidate, with a short float at 8.37% (equivalent to 5.81 days of average volume). The stock has lost 15.61% over the last year.

5. American International Group, Inc. (AIG): Property and Casualty Insurance Industry. Market cap of $67.33B. Price/Free Cash Flow at 4.12. Net institutional shares bought during the current quarter at 13.4M vs. 3.5M net shares purchased during the previous quarter (x2.83 increase). The stock has gained 30.39% over the last year.

6. Fifth Third Bancorp (FITB): Regional Bank. Market cap of $12.76B. Price/Free Cash Flow at 4.49. Net institutional shares bought during the current quarter at 19.3M vs. 6.2M net shares purchased during the previous quarter (x2.11 increase). Note that this is a risky stock that is significantly more volatile than the overall market (beta = 2.25). The stock has gained 4.2% over the last year. 



7. Zions Bancorp. (ZION): Regional Bank. Market cap of $4.23B. Price/Free Cash Flow at 3.32. Net institutional shares bought during the current quarter at 11.1M vs. 4.4M net shares purchased during the previous quarter (x1.52 increase). The stock is a short squeeze candidate, with a short float at 10.21% (equivalent to 5.01 days of average volume). The stock has gained 8.96% over the last year.

8. Citigroup, Inc. (C): Money Center Banks Industry. Market cap of $131.91B. Price/Free Cash Flow at 3.93. Net institutional shares bought during the current quarter at 3.4B vs. 1.5B net shares purchased during the previous quarter (x1.27 increase). This is a risky stock that is significantly more volatile than the overall market (beta = 2.53). The stock has gained 16.71% over the last year.

Source: Top 8 Cash-Rich Companies Being Snapped Up by Smart Money