LBO Ideas: 5 Potential Leveraged Buyout Targets With Bullish Options Sentiment

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 |  Includes: AEE, KEP, NTT, TDS, URS
by: Kapitall

Private equity funds usually look for companies that are undervalued, with low debt to asset ratio and good cash flows. Given this framework we looked for stocks with these characteristics, as represented by the following metrics:

- Market cap < book value
- Debt to asset ratio below 1
- Price to cash flow below 10

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

We also created a price-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.

Options traders think these stocks are bound to rally … do you?

1. Nippon Telegraph & Telephone Corp. (NYSE:NTT): Telecom Services Industry. Market cap of $62.24B. Book value at $99.63B vs. market cap at $68.16B. Total debt to assets at 0.23. Price to Cash Flow at 2.33. Put/Call ratio at 0.04, given the call open interest at 9,382 contracts vs. put open interest at 405 contracts. The stock has gained 19.03% over the last year.

2. Telephone & Data Systems Inc. (NYSE:TDS): Wireless Communications Industry. Market cap of $3.24B. Book value at $3.84B vs. market cap at $3.05B. Price to Cash Flow at 0.22. Total debt to assets at 3.1. Put/Call ratio at 0.16, given the call open interest at 816 contracts vs. put open interest at 130 contracts. The stock has gained 1.96% over the last year.

3. Korea Electric Power Corp. (NYSE:KEP): Electric Utilities Industry. Market cap of $16.18B. Book value at $37.84B vs. market cap at $16.79B. Price to Cash Flow at 0.37. Total debt to assets at 2.62. Put/Call ratio at 0.27, given the call open interest at 1,316 contracts vs. put open interest at 355 contracts. The stock has lost 2.04% over the last year.

4. URS Corporation (NYSE:URS): Technical Services Industry. Market cap of $3.33B. Book value at $4.06B vs. market cap at $3.33B. Price to Cash Flow at 0.09. Total debt to assets at 7.15. Put/Call ratio at 0.4, given the call open interest at 2,211 contracts vs. put open interest at 891 contracts. The stock has gained 2.77% over the last year.

5. Ameren Corporation (NYSE:AEE): Diversified Utilities Industry. Market cap of $6.89B. Book value at $7.73B vs. market cap at $6.89B. Price to Cash Flow at 0.33. Total debt to assets at 6.39. Put/Call ratio at 0.5, given the call open interest at 3,356 contracts vs. put open interest at 1,678 contracts. The stock has gained 26.6% over the last year.

*Data sourced from Screener.co, Schaeffer’s and Finviz.

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