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The put/call ratio can be a very helpful indicator for excessively positive or negative sentiment. In the case of extremely high put/call ratios, contrarian investors might argue that the excessive bearishness would indicate that a turnaround is imminent.

With that in mind, we wanted to look at currently undervalued stocks, with PEG < 1 and P/FCF < 10. Among these undervalued stocks, we wanted to find those with the highest increases in put/call ratios over the last two weeks, reaching the upper end of their annual P/C ranges. The final list of 10 is below.



Do you think these stocks are about to rebound? Use this list as a starting-off point for your own analysis.

List sorted by increase in put/call ratio.

1. Ruby Tuesday, Inc. (NYSE:RT): Restaurants Industry. Market cap of $690.71M. PEG at 0.96. P/FCF at 7.69. Put/Call ratio has increased 233.96% over the last ten trading days (from 0.53 to 1.77, which is currently at 100% of its annual P/C range). The stock is currently stuck in a downtrend, trading 8.01% below its SMA20, 14.65% below its SMA50, and 13.77% below its SMA200. The stock has performed poorly over the last month, losing 15.12%.



2. The Dolan Company (NYSE:DM): Publishing Industry. Market cap of $363.83M. PEG at 0.65. P/FCF at 6.58. Put/Call ratio has increased 228.57% over the last ten trading days (from 4.55 to 14.95, which is currently at 97% of its annual P/C range). The stock has gained 1.96% over the last year.

3. American Financial Group Inc. (NYSE:AFG): Property & Casualty Insurance Industry. Market cap of $3.72B. PEG at 0.92. P/FCF at 5.11. Put/Call ratio has increased 184.21% over the last ten trading days (from 0.19 to 0.54, which is currently at 94% of its annual P/C range). The stock has gained 21.66% over the last year.



4. Unisys Corporation (NYSE:UIS): Information Technology Services Industry. Market cap of $1.23B. PEG at 0.98. P/FCF at 9.2. Put/Call ratio has increased 147.17% over the last ten trading days (from 0.53 to 1.31, which is currently at 93% of its annual P/C range). It's been a rough couple of days for the stock, losing 11% over the last week.

5. Xerox Corp. (NYSE:XRX): Business Equipment Industry. Market cap of $14.18B. PEG at 0.97. P/FCF at 9.41. Put/Call ratio has increased 138.10% over the last ten trading days (from 1.05 to 2.5, which is currently at 97% of its annual P/C range). It's been a rough couple of days for the stock, losing 6.64% over the last week.

6. DST Systems Inc. (NYSE:DST):
Information & Delivery Services Industry. Market cap of $2.27B. PEG at 0.73. P/FCF at 9.14. Put/Call ratio has increased 125.00% over the last ten trading days (from 0.4 to 0.9, which is currently at 81% of its annual P/C range). The stock has gained 14.53% over the last year.

7. GT Solar International, Inc. (SOLR): Semiconductor Industry. Market cap of $1.36B. PEG at 0.71. P/FCF at 5.89. Put/Call ratio has increased 85.94% over the last ten trading days (from 0.64 to 1.19, which is currently at 88% of its annual P/C range). The stock has had a couple of great days, gaining 12.09% over the last week.

8. Tower Group Inc. (NASDAQ:TWGP):
Property & Casualty Insurance Industry. Market cap of $953.37M. PEG at 0.35. P/FCF at 8.18. Put/Call ratio has increased 74.67% over the last ten trading days (from 2.25 to 3.93, which is currently at 97% of its annual P/C range). The stock is a short squeeze candidate, with a short float at 89.41% (equivalent to 11.3 days of average volume). The stock has lost 1.3% over the last year.

9. Horace Mann Educators Corp. (NYSE:HMN):
Property & Casualty Insurance Industry. Market cap of $708.48M. PEG at 0.87. P/FCF at 4.94. Put/Call ratio has increased 54.96% over the last ten trading days (from 25.58 to 39.64, which is currently at 100% of its annual P/C range). The stock has had a couple of great days, gaining 7.48% over the last week.

10. Republic Bancorp Inc. (NASDAQ:RBCAA):
Regional Bank. Market cap of $458.38M. PEG at 0.5. P/FCF at 3.3. Put/Call ratio has increased 45.45% over the last ten trading days (from 2.75 to 4, which is currently at 97% of its annual P/C range). The stock has had a couple of great days, gaining 14.91% over the last week.

*Options data sourced from Schaeffer’s, 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.

Source: Contrarian Ideas: 10 Undervalued Stocks With Extremely High Put/Call Ratios