8 Growing Large Cap Companies Analysts Like

In the past, our screens mostly relied on objective financial data about companies. However, we can also use the Screener.co stock screener to screen based on consensus analyst estimates. First, we can look at the target price, the price that analysts believe the stock should trade for, and compare it to the most recent closing price. Those stocks with the biggest delta are believed by analysts to be most undervalued. Second, we can look at the consensus recommendation, a score from 1 (Strong Buy) to 5 (Strong Sell) that is an indicator of analyst sentiment about the stock. Obviously, lower numbers are better. Let's limit ourselves to companies with more than $1B of revenue and use the following criteria:

Field	op	Criteria
Target price	>	1.5 * Price-closing or last bid
Consensus recommendation	<	2
Country Located In	!=	"China"
Total Revenue(A)	>	1,000,000,000
Sector	!=	"Financial"

We require that the target price be at least 50% above the current price and a 2 (Buy) or better consensus recommendation. Sorting by descending YoY revenue growth rate yields the following 8 results with positive growth rates, as of 4/22/2011:

Symbol	Company Name
PWER	Power-One, Inc.
KGC	Kinross Gold Corporation (USA)
BIOS	BioScrip Inc.
LEA	Lear Corporation
LCC	US Airways Group, Inc.
SYX	Systemax Inc.
CVO	Cenveo, Inc.
VCI	Valassis Communications, Inc.

Power-One (PWER) has a consensus recommendation of 1.8 and a target price of $11.70 despite closing at $7.69. Its target price is 52% above its closing price and it grew revenue 143% YoY. The company has a strong balance sheet and is trading at an EV/EBITDA ratio of just 1.92. However, the company does not anticipate being able to keep up its growth--in fact, analysts are projecting YoY revenue shrinkage this year. However, at its current valuation, they remain relative bullish on the company's prospects.

Kincross Gold (KGC) has a consensus recommendation of 1.96, barely missing our 2.0 cut off, and a target price of $23.15, 51% above its closing price of $15.35. However, the company is trading at an EV/EBITDA ratio of 11.5 and a PEG ratio of 2.29, well above the levels we typically use for our value screens. In my opinion, Kincross is benefiting from the recent "gold fever" that has seen prices exceed $1,500 an ounce. I am not an expert on commodities, but if I were interested in getting exposure to gold, I would probably look for avenues other than a miner and processor trading at an EV/EBITDA ratio of 11.5 and a PEG ratio above 2.

BioScript (BIOS) is a specialty pharmaceutical distribution company. It offers prescription discount cards and owns community, mail order and infusion pharmacies. It has a consensus recommendation of 1.67 and a target price of $6.33, almost exactly 50% above the most recent closing price of $4.21. It also has a high EV/EBITDA ratio of 13.35 and a PEG ratio of 1.25. I think the analyst optimism in this case is based on longer term projections, like the 2012 projected earnings of $0.48/share. If the company hits those numbers, the stock looks much more attractively valued at current levels, but that is still almost two full years off.

Lear (LEA) is a US-based auto parts manufacturer. It has a consensus recommendation of 1.73 and a target price of $83.37, 70% above the closing price of $48.97. The company grew revenue 23% YoY and is trading at an EV/EBITDA ratio of 4.7 and a PEG ratio of 0.89. The company has a relatively healthy balance sheet, particularly for an auto parts manufacturer, and is trading at a forward P/E of under 10. However, I remain bearish on the domestic auto industry. If you want exposure to the segment, however, LEA looks to me like a more interesting play (based on its performance and relatively clean balance sheet) than GM or others. Perhaps that fact, coupled with the current valuation metrics, are the source of the analyst optimism.

US Airways Group (LCC) is an airline that has a consensus recommendation of 1.93 and a target price of $12.82, a 58% premium to the closing price of $8.13. Revenue grew 13.9% YoY and the company is trading at a farly conservative valuation: EV/EBITDA of 3.65 and P/E of 3.11. However, the company has a leveraged balance sheet with $4.4B of long term debt relative to a market cap of $1.3B. For a company with a balance sheet like this, where there is not a lot of room for error, I think you really need to consider the company and industry it operates in to make a smart bet. Factors like increasing fuel prices can have a substantial impact on the company's relatively low margins, for example. I am not an expert on airlines and probably cannot become one over the course of writing this article. As a result, I will seek out greener pastures.

Systemax (SYX) is a retailer that owns the CompUSA and TigerDirect brands. The company has a consensus recommendation of 1 and a target price of $21, a 64% premium to the most recent closing price of $12.82. It grew revenue 13.4% YoY but is still trading at an EV/EBITDA ratio of just 4.45. The stock is relatively thinly traded and it only has two analysts following it. In addition, the head of the company's technology products group was recently terminated following an anonymous whistleblower complaint. While the company's current valuation is attractive, I do not think it fully reflects the cloud of impropriety that currently hangs over the company. The company has not yet disclosed what the issue that prompted the whistleblower complaint was; until that information hits the market, I will keep my distance....unless the valuation multiples decline further.

Cenveo (CVO) is a printing company with a consensus recommendation of 1.5 and a target price of $11.50, 84.6% above the closing price of $6.23. It managed to grow revenue 5.8% YoY despite being in a declining market. It is trading at an EV/EBITDA ratio of 8.4. Being a "digital native," I could not imagine buying into a printing or paper products company at this juncture, even if the EV/EBITDA ratio were lower. The market faces enormous challenges ahead.

Valassis Communications (VCI) is a media and marketing services company with a consensus recommendation of 1.56 and a target price of $42, a 60% premium to the closing price of $26.29. The company is trading at an EV/EBITDA ratio of 6.2. The company specializes in direct mail, newspaper and shared mail advertising. Newspaper's share of the advertising market has been in decline for decades (since at least 1949). In fairness, direct mail has not suffered nearly as badly and has even gained share. Nevertheless, it faces new pressure from e-mail and even SMS marketing. This is just not my cup of tea.

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