Value Ideas: 19 Stocks With Low PEG Ratios and Significant Free Cash Flow

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 |  Includes: ACE, AET, AFG, CEL, CNO, DOLNQ, DXPE, GTIV, HIG, IDCC, IPXL, LUV, NTT, PBY, RGA, SAFT, SHPG, TPCG, UNM
by: Kapitall

The following is a list of stocks that have PEG ratios below 1.0, which usually signal undervalued conditions. Additionally, these companies have high TTM levered free cash flows as a percentage of market cap (i.e. exceeding 10%).

Levered free cash flow is the free cash flow available to the company after paying interest on outstanding debt. It is a measure of the cash flow that is truly available to the company.

These stocks are trading at attractive valuations, based on their past performance and current PEG ratios, and producing significant amounts of levered free cash flows. As a result, this list might offer a great starting point to value investors looking for undervalued names.

What do you think? Which of these names do you favor? Full details below.



List sorted by levered free cash flow as a percentage of market cap.

1. American Financial Group Inc. (NYSE:AFG): Property & Casualty Insurance Industry. Market cap of $3.64B. PEG at 0.89. TTM levered free cashflow at $2.51B, which represents approximately 68.88% of the company's market cap. The stock has gained 26.22% over the last year.

2. ACE Limited (NYSE:ACE): Property & Casualty Insurance Industry. Market cap of $20.83B. PEG at 0.61. TTM levered free cashflow at $12.00B, which represents approximately 57.6% of the company's market cap. The stock has gained 21.2% over the last year.

3. Reinsurance Group of America Inc. (NYSE:RGA): Life Insurance Industry. Market cap of $3.86B. PEG at 0.91. TTM levered free cashflow at $1.84B, which represents approximately 47.72% of the company's market cap. The stock has gained 23.25% over the last year.

4. Hartford Financial Services Group Inc. (NYSE:HIG): Property & Casualty Insurance Industry. Market cap of $11.78B. PEG at 0.97. TTM levered free cashflow at $5.47B, which represents approximately 46.43% of the company's market cap. This is a risky stock that is significantly more volatile than the overall market (beta = 3.04). The stock has performed poorly over the last month, losing 13.66%.

5. CNO Financial Group, Inc. (NYSE:CNO): Accident & Health Insurance Industry. Market cap of $1.78B. PEG at 0.66. TTM levered free cashflow at $822.29M, which represents approximately 46.26% of the company's market cap. The stock is a short squeeze candidate, with a short float at 7.74% (equivalent to 10.07 days of average volume). The stock has gained 16.45% over the last year.

6. Impax Laboratories Inc. (NASDAQ:IPXL): Drug Manufacturer. Market cap of $1.56B. PEG at 0.77. TTM levered free cashflow at $388.67M, which represents approximately 24.98% of the company's market cap. The stock has had a couple of great days, gaining 8.74% over the last week.

7. Nippon Telegraph & Telephone Corp. (NYSE:NTT): Telecom Services Industry. Market cap of $60.84B. PEG at 0.54. TTM levered free cashflow at $10.58B, which represents approximately 17.39% of the company's market cap. Relatively low correlation to the market (beta = 0.32), which may be appealing to risk averse investors. The stock has gained 6.39% over the last year.

8. TPC Group Inc (NASDAQ:TPCG): Chemicals Industry. Market cap of $497.59M. PEG at 0.69. TTM levered free cashflow at $82.00M, which represents approximately 16.48% of the company's market cap. The stock has gained 172.5% over the last year.

9. Aetna Inc. (NYSE:AET): Health Care Plans Industry. Market cap of $13.68B. PEG at 0.77. TTM levered free cashflow at $2.22B, which represents approximately 16.23% of the company's market cap. The stock has gained 2.8% over the last year.

10. InterDigital, Inc. (NASDAQ:IDCC): Wireless Communications Industry. Market cap of $1.97B. PEG at 0.72. TTM levered free cashflow at $280.14M, which represents approximately 14.25% of the company's market cap. The stock is a short squeeze candidate, with a short float at 17.27% (equivalent to 6.88 days of average volume). After a solid performance over the last year, IDCC has pulled back during recent sessions. The stock is -4.78% below its SMA20 and -10.89% below its SMA50, but remains 24.33% above its SMA200.

11. Cellcom Israel Ltd. (NYSE:CEL): Wireless Communications Industry. Market cap of $3.19B. PEG at 0.96. TTM levered free cashflow at $416.82M, which represents approximately 13.06% of the company's market cap. The stock has gained 2.66% over the last year.

12. Safety Insurance Group Inc. (NASDAQ:SAFT): Property & Casualty Insurance Industry. Market cap of $683.41M. PEG at 0.8. TTM levered free cashflow at $84.91M, which represents approximately 12.42% of the company's market cap. Relatively low correlation to the market (beta = 0.51), which may be appealing to risk averse investors. The stock has gained 23.91% over the last year.

13. The Dolan Company (NYSE:DM):
Publishing Industry. Market cap of $364.36M. PEG at 0.65. TTM levered free cashflow at $42.60M, which represents approximately 11.69% of the company's market cap. The stock is currently stuck in a downtrend, trading -7.51% below its SMA20, -15.06% below its SMA50, and -6.25% below its SMA200. The stock has performed poorly over the last month, losing 12.96%.

14. Gentiva Health Services Inc. (NASDAQ:GTIV)
: Home Health Care Industry. Market cap of $859.84M. PEG at 0.97. TTM levered free cashflow at $95.26M, which represents approximately 11.08% of the company's market cap. Relatively low correlation to the market (beta = 0.6), which may be appealing to risk averse investors. The stock is a short squeeze candidate, with a short float at 5.18% (equivalent to 7.86 days of average volume). The stock has lost 5.18% over the last year.

15. ViroPharma Inc. (VPHM): Biotechnology Industry. Market cap of $1.52B. PEG at 0.84. TTM levered free cashflow at $167.80M, which represents approximately 11.06% of the company's market cap. The stock is a short squeeze candidate, with a short float at 6.23% (equivalent to 5.63 days of average volume). The stock has had a good month, gaining 14.04%.

16. DXP Enterprises Inc. (NASDAQ:DXPE): Industrial Equipment Wholesale Industry. Market cap of $319.14M. PEG at 0.76. TTM levered free cashflow at $35.04M, which represents approximately 10.98% of the company's market cap. The stock has had a couple of great days, gaining 12.18% over the last week.

17. Southwest Airlines Co. (NYSE:LUV): Regional Airlines Industry. Market cap of $9.18B. PEG at 0.97. TTM levered free cashflow at $978.38M, which represents approximately 10.66% of the company's market cap. The stock has lost 4.88% over the last year.

18. Pep Boys - Manny, Moe & Jack (NYSE:PBY):
Auto Parts Stores Industry. Market cap of $580.87M. PEG at 0.85. TTM levered free cashflow at $61.30M, which represents approximately 10.55% of the company's market cap. The stock has performed poorly over the last month, losing 22.28%.

19. Unum Group (NYSE:UNM): Accident & Health Insurance Industry. Market cap of $8.13B. PEG at 0.79. TTM levered free cashflow at $818.83M, which represents approximately 10.07% of the company's market cap. Might be undervalued at current levels, with a PEG ratio at 0.79, and P/FCF ratio at 7.51. The stock has gained 11.18% 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.