5 Low-Beta, Large-Cap Stocks That Are Undervalued Relative to Free Cash Flow

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 |  Includes: GSK, MRK, PCRFY, TGT, VZ
by: Kapitall

If you're looking for low-risk value ideas, the following list might offer an interesting starting point.

Here we present 5 large cap stocks with high TTM levered free cash flows, greater than 10% of market cap. Note: Levered free cash flow is the free cash flow available after paying interest and making required principal re-payments on outstanding debt.

In other words, these companies are deeply undervalued relative to free cash flows. These stocks also have lower correlations to the stock market (and thus lower risk), each with beta below 1.



Do you think these companies offer compelling value opportunities? Read below, using this list as a starting-off point for your own analysis.

List sorted by levered FCF as a percentage of market cap.

1. Panasonic Corporation (PC): Electronic Equipment Industry. Market cap of $26.29B. Beta at 0.8. TTM levered free cash flow at 4.92B, which is 18.71% of market cap. The stock has lost 19.11% over the last year.



2. Verizon Communications Inc. (NYSE:VZ): Telecom Services Industry. Market cap of $107.72B. Beta at 0.68. TTM levered free cash flow at 15.21B, which is 14.12% of market cap. The stock has gained 29.97% over the last year.



3. GlaxoSmithKline plc (NYSE:GSK): Drug Manufacturer. Market cap of $100.71B. Beta at 0.59. TTM levered free cash flow at 13.39B, which is 13.30% of market cap. The stock has gained 5.93% over the last year.



4. Merck & Co. Inc. (NYSE:MRK): Drug Manufacturer. Market cap of $101.96B. Beta at 0.7. TTM levered free cash flow at 11.16B, which is 10.95% of market cap. MRK offers a good dividend, and appears to have good liquidity to back it up--dividend yield at 4.6%, current ratio at 1.86, and quick ratio at 1.48. The stock has lost 7.6% over the last year.



5. Target Corp. (NYSE:TGT): Discount, Variety Stores Industry. Market cap of $34.90B. Beta at 0.96. TTM levered free cash flow at 3.78B, which is 10.83% of market cap. The stock has lost 4.69% over the last year.



*Levered FCF sourced from Yahoo! Finance, all other data sourced from Finviz.

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