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Here we present you with 10 companies that seem to be undervalued when comparing their current price to analysts’ target prices (used as a proxy for fair value).

Most importantly, all of these names have generated significant amounts of levered free cash flow during the most recent quarter.

Note: 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.

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.


(Click to enlarge)

Given this data, which of these stocks do you think is a better value investment? Or, which of these names are value traps, in your opinion?

1. Sony Corporation (NYSE:SNE): Electronic Equipment Industry. Market cap of $28.81B. This stock is trading at a discount of 23.11%, when comparing the current price of $29.02 vs. the target price of $37.74. TTM levered free cash flow at 18.24B, which represents about 63.3% of the company's market cap. The stock has lost 16.41% over the last year.

2. United Continental Holdings, Inc. (NYSE:UAL): Major Airlines Industry. Market cap of $8.38B. This stock is trading at a discount of 20.13%, when comparing the current price of $26.07 vs. the target price of $32.64. TTM levered free cash flow at 4.93B, which represents about 58.85% of the company's market cap. The stock has had a couple of great days, gaining 7.78% over the last week.

3. American Equity Investment Life Holding Co. (NYSE:AEL): Life Insurance Industry. Market cap of $756.59M. This stock is trading at a discount of 23.06%, when comparing the current price of $13.08 vs. the target price of $17.0. TTM levered free cash flow at 420.00M, which represents about 55.51% of the company's market cap. The stock is a short squeeze candidate, with a short float at 12.17% (equivalent to 12.15 days of average volume).

4. US Airways Group, Inc. (LCC): Major Airlines Industry. Market cap of $1.51B. This stock is trading at a discount of 24.43%, when comparing the current price of $9.53 vs. the target price of $12.61. TTM levered free cash flow at 711.75M, which represents about 47.14% of the company's market cap. The stock has had a good month, gaining 13.11%.

5. EnergySolutions, Inc (NYSE:ES): Waste Management Industry. Market cap of $481.89M. This stock is trading at a discount of 24.74%, when comparing the current price of $5.72 vs. the target price of $7.6. TTM levered free cash flow at 214.56M, which represents about 44.52% of the company's market cap. The stock has lost 22.59% over the last year.

6. H&R Block, Inc. (NYSE:HRB): Personal Services Industry. Market cap of $4.86B. This stock is trading at a discount of 20.75%, when comparing the current price of $15.7 vs. the target price of $19.81. TTM levered free cash flow at 1.85B, which represents about 38.05% of the company's market cap. The stock is a short squeeze candidate, with a short float at 9.89% (equivalent to 5.11 days of average volume). After a solid performance over the last year, HRB has pulled back during recent sessions. The stock is -9.92% below its SMA20 and -5.64% below its SMA50, but remains 14.2% above its SMA200.

7. Genworth Financial Inc. (NYSE:GNW): Life Insurance Industry. Market cap of $5.61B. This stock is trading at a discount of 23.6%, when comparing the current price of $11.3 vs. the target price of $14.79. TTM levered free cash flow at 2.00B, which represents about 35.64% of the company's market cap. This is a risky stock that is significantly more volatile than the overall market (beta = 3.13).

8. Ford Motor Co. (NYSE:F): Auto Manufacturer Industry. Market cap of $57.26B. This stock is trading at a discount of 24.31%, when comparing the current price of $15.19 vs. the target price of $20.07. TTM levered free cash flow at 18.77B, which represents about 32.78% of the company's market cap. This is a risky stock that is significantly more volatile than the overall market (beta = 2.38). The stock has gained 24.12% over the last year.

9. Cabela's Inc. (NYSE:CAB): Sporting Goods Stores Industry. Market cap of $1.60B. This stock is trading at a discount of 27.24%, when comparing the current price of $23.93 vs. the target price of $32.89. TTM levered free cash flow at 381.87M, which represents about 23.82% of the company's market cap. The stock is a short squeeze candidate, with a short float at 11.06% (equivalent to 6.91 days of average volume).

10. Sinclair Broadcast Group Inc. (NASDAQ:SBGI): Broadcasting Industry. Market cap of $827.38M. This stock is trading at a discount of 26.96%, when comparing the current price of $10.35 vs. the target price of $14.17. TTM levered free cash flow at 195.89M, which represents about 23.68% of the company's market cap. The stock is a short squeeze candidate, with a short float at 7.18% (equivalent to 5.83 days of average volume).

*Institutional data sourced from Fidelity, all other data sourced from Finviz.

Source: Value Ideas: 10 Undervalued Stocks With Levered Free Cash Flow