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Some investors view the put/call ratio as a contrarian indicator in which extreme readings may indicate that a turnaround is imminent.

Here we offer a list of stocks centered around that idea. We searched for stocks that appear undervalued relative to free cash flow (with P/FCF below 10) and relative to earnings growth (with PEG below 1). Among these stocks, we then searched for those with very large increases in put/call ratio over the last two weeks, to the upper levels of the stocks’ annual put/call ranges.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

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

List sorted by increase in put/call ratio.

1. RF Micro Devices Inc. (NASDAQ:RFMD): Semiconductor Industry. Market cap of $1.61B. PEG at 0.81, P/FCF at 8.56. Put/Call ratio has increased 370.00% over the last ten trading days (from 0.2 to 0.94, currently placed at 100% of the annual p/c range). This is a risky stock that is significantly more volatile than the overall market (beta = 2.46). It's been a rough couple of days for the stock, losing 5.69% over the last week.

2. DST Systems Inc. (NYSE:DST): Information & Delivery Services Industry. Market cap of $2.25B. PEG at 0.77, P/FCF at 6.18. Put/Call ratio has increased 127.78% over the last ten trading days (from 0.54 to 1.23, currently placed at 94% of the annual p/c range). The stock has gained 35.19% over the last year.

3. Internet Initiative Japan Inc. (NASDAQ:IIJI): Internet Service Providers Industry. Market cap of $742.03M. PEG at 0.6, P/FCF at 7.25. Put/Call ratio has increased 25.42% over the last ten trading days (from 0.59 to 0.74, currently placed at 90% of the annual p/c range). The stock is exhibiting strong upside momentum--currently trading 7.49% above its SMA20, 15.83% above its SMA50, and 31.69% above its SMA200. The stock has had a good month, gaining 14.41%.

4. USANA Health Sciences Inc. (NYSE:USNA): Drug Related Products Industry. Market cap of $440.53M. PEG at 0.6, P/FCF at 6.86. Put/Call ratio has increased 21.51% over the last 10 trading days (from 1.86 to 2.26, currently placed at 72% of the annual p/c range). The stock is a short squeeze candidate, with a short float at 15.21% (equivalent to 9.77 days of average volume). The stock is currently stuck in a downtrend, trading 7.83% below its SMA20, 15.46% below its SMA50, and 27.7% below its SMA200. The stock has performed poorly over the last month, losing 23.24%.

5. Impax Laboratories Inc. (NASDAQ:IPXL): Drug Manufacturer. Market cap of $1.52B. PEG at 0.92, P/FCF at 7.95. Put/Call ratio has increased 18.31% over the last ten trading days (from 0.71 to 0.84, currently placed at 90% of the annual p/c range). The stock is a short squeeze candidate, with a short float at 8.63% (equivalent to 7.19 days of average volume). It's been a rough couple of days for the stock, losing 14.31% over the last week.

6. Iconix Brand Group, Inc. (NASDAQ:ICON): Apparel Footwear & Accessories Industry. Market cap of $1.62B. PEG at 0.85, P/FCF at 9.92. Put/Call ratio has increased 9.80% over the last ten trading days (from 0.51 to 0.56, currently placed at 88% of the annual p/c range). The stock is a short squeeze candidate, with a short float at 10.37% (equivalent to 11.8 days of average volume). It's been a rough couple of days for the stock, losing 8.57% over the last week.

*Options data sourced from Schaeffer’s, all other data sourced from Finviz.

Source: Contrarian Ideas: 6 Undervalued Stocks With Extremely Bearish Put/Call Ratios