When looking into any stock, one unifying theme is the need to check free cash flows as a source of value to shareholders.
Looking into European stocks, we wanted to find those with the highest amounts of levered free cash flow as a percentage of market cap. Levered free cash flow is free cash flow after deducting interest expense - from levered FCF, dividends are paid and/or the money is reinvested into the company.
We also created an equal weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.
Do you think these companies are fairly valued, given how much free cash flow they are generating? Use this list as a starting-off point for your own analysis.
List sorted by levered FCF as a percent of market cap.
1. FLY Leasing Limited (FLY): Rental & Leasing Services Industry. Market cap of $365.66M. Ireland. Levered free cash flow at $141.09M, which is 38.59% of market cap. The stock has gained 19.56% over the last year.
2. CNH Global NV (CNH): Farm & Construction Machinery Industry. Market cap of $11.03B. Netherlands. Levered free cash flow at $2.31B, which is 20.95% of market cap. This is a risky stock that is significantly more volatile than the overall market (beta = 2.55). The stock has gained 51.61% over the last year.
3. Global Ship Lease, Inc. (GSL): Shipping Industry. Market cap of $336.51M. United Kingdom. Levered free cash flow at $65.10M, which is 19.35% of market cap. After a solid performance over the last year, GSL has pulled back during recent sessions. The stock is 3.18% below its SMA20 and 6.2% below its SMA50, but remains 30.18% above its SMA200. The stock has gained 94.64% over the last year.
4. Telecom Italia SpA (TI): Diversified Communication Services Industry. Market cap of $28.87B. Italy. Levered free cash flow at $5.32B, which is 18.43% of market cap. The stock has gained 27.01% over the last year.
5. LyondellBasell Industries NV (LYB): Specialty Chemicals Industry. Market cap of $25.31B. Netherlands. Levered free cash flow at $4.52B, which is 17.86% of market cap. The stock has had a good month, gaining 10.93%.
6. Ternium S.A. (TX): Steel & Iron Industry. Market cap of $6.65B. Luxembourg. Levered free cash flow at $1.14B, which is 17.14% of market cap. This is a risky stock that is significantly more volatile than the overall market (beta = 2.23). The stock might be undervalued at current levels, with a PEG ratio at 0.7, and P/FCF ratio at 14.56. The stock has lost 0.84% over the last year.
7. Excel Maritime Carriers, Ltd. (EXM): Shipping Industry. Market cap of $340.52M. Greece. Levered free cash flow at $57.23M, which is 16.81% of market cap. This is a risky stock that is significantly more volatile than the overall market (beta = 2.88). The stock is currently stuck in a downtrend, trading 5.3% below its SMA20, 10.74% below its SMA50, and 25.07% below its SMA200. The stock has lost 42.45% over the last year.
8. France Telecom (FTE): Telecom Services Industry. Market cap of $62.01B. France. Levered free cash flow at $10.38B, which is 16.74% of market cap. The stock has gained 24.65% over the last year.
9. Nokia Corporation (NOK): Communication Equipment Industry. Market cap of $35.37B. Finland. Levered free cash flow at $4.89B, which is 13.82% of market cap. The stock offers a good dividend, and appears to have good liquidity to back it up--dividend yield at 5.86%, current ratio at 1.65, and quick ratio at 1.49. The stock has had a couple of great days, gaining 5.08% over the last week.
10. WPP plc (WPPGY): Advertising Agencies Industry. Market cap of $16.03B. United Kingdom. Levered free cash flow at $2.06B, which is 12.85% of market cap. The stock has gained 24.53% over the last year.
11. Telefonica, S.A. (TEF): Telecom Services Industry. Market cap of $118.12B. Spain. Levered free cash flow at $15.14B, which is 12.82% of market cap. The stock has gained 36.79% over the last year.
12. ASM International NV (ASMI): Semiconductor Equipment & Materials Industry. Market cap of $2.37B. Netherlands. Levered free cash flow at $287.60M, which is 12.14% of market cap. This is a risky stock that is significantly more volatile than the overall market (beta = 2.36). The stock has had a couple of great days, gaining 8.69% over the last week.
13. AstraZeneca PLC (AZN): Drug Manufacturer Industry. Market cap of $69.76B. United Kingdom. Levered free cash flow at $8.46B, which is 12.13% of market cap. The stock has a relatively low correlation to the market (beta = 0.58), which may be appealing to risk-averse investors. AZN offers a good dividend, and appears to have good liquidity to back it up--dividend yield at 5.06%, current ratio at 1.5, and quick ratio at 1.4. The stock has gained 20.55% over the last year.
14. BT Group plc (BT): Telecom Services Industry. Market cap of $24.82B. United Kingdom. Levered free cash flow at $2.92B, which is 11.77% of market cap. The stock has gained 77.17% over the last year.
15. GlaxoSmithKline plc (GSK): Drug Manufacturer. Market cap of $113.12B. United Kingdom. Levered free cash flow at $13.17B, which is 11.64% of market cap. Risk-averse investors may appreciate that GSK has a relatively low correlation to the market (beta = 0.61). The stock has had a good month, gaining 12.33%.
16. Statoil ASA (STO): Oil & Gas Drilling & Exploration Industry. Market cap of $89.60B. Norway. Levered free cash flow at $10.08B, which is 11.25% of market cap. The stock has gained 24.61% over the last year.
17. VimpelCom Ltd. (VIP): Wireless Communications Industry. Market cap of $18.73B. Netherlands. Levered free cash flow at $1.90B, which is 10.14% of market cap. The stock might be undervalued at current levels, with a PEG ratio at 0.68, and P/FCF ratio at 14.03. The stock has lost 15.21% 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.
