4 Low-Debt Companies Undervalued by Cash Flow With Bearish Options Sentiment

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 |  Includes: ANTM, EA, KLAC, VRSN
by: Kapitall

Do you consider yourself a market contrarian? If so, you may be interested in this list.

The put/call ratio is viewed by some as a contrarian indicator – when it reaches extremely bearish levels, an upcoming rally may be indicated.

Here we ran a screen with that in mind, starting with companies holding low long-term debt relative to market cap that also appear undervalued relative to MRQ cash flow (P/CF below 5). From these stocks, we then searched for those with significant jumps in put/call ratio over the last ten trading days, reaching the highest levels of their annual p/c ranges.

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.

Do you think these companies are being undervalued? Use this list as a starting-off point for your own analysis.

List sorted by increase in put/call ratio.

1. AMERIGROUP Corporation (AGP): Health Care Plans Industry. Market cap of $3.31B. Price to MRQ Cash Flow at 3.55. Long-term debt at $245.75M, or 7.42% of market cap. Put/Call ratio has increased 67.82% over the last ten trading days, from 0.87 to 1.46, currently placed at 92% of the annual p/c range. The stock is a short squeeze candidate, with a short float at 10.59% (equivalent to 7.01 days of average volume). It's been a rough couple of days for the stock, losing 5.85% over the last week.

2. KLA-Tencor Corporation (NASDAQ:KLAC): Semiconductor Equipment & Materials Industry. Market cap of $6.90B. Price to MRQ Cash Flow at 3.75. Long-term debt at $745.75M, or 10.80% of market cap. Put/Call ratio has increased 20.51% over the last ten trading days, from 0.78 to 0.94, currently placed at 64% of the annual p/c range. The stock has gained 47.6% over the last year.

3. Electronic Arts Inc. (ERTS): Multimedia & Graphics Software Industry. Market cap of $7.76B. Price to MRQ Cash Flow at 3.47. Long-term debt at $0M. Put/Call ratio has increased 10.68% over the last ten trading days, from 1.03 to 1.14, currently placed at 99% of the annual p/c range. The stock has gained 50.74% over the last year.

4. VeriSign Inc. (NASDAQ:VRSN): Application Software Industry. Market cap of $5.76B. Price to MRQ Cash Flow at 2.96. Long-term debt at $581.63M, or 10.09% of market cap. Put/Call ratio has increased 6.25% over the last ten trading days, from 0.8 to 0.85, currently placed at 86% of the annual p/c range. The stock has gained 34.37% over the last year.

*Options data sourced from Schaeffer’s, debt and P/CF data sourced from Screener.co, 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.