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To construct this list we looked for stocks with three characteristics:

  • Market cap above $300M
  • Levered free cash flow to market cap above 20%
  • Trailing Twelve Month (TTM) free operating cash flow to revenue greater than 3yr and 5yr averages

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.

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.

Considering these data points, which of these names would you rate as the best value stock?

1. Aaron's, Inc. (NYSE:AAN): Rental & Leasing Services Industry. Market cap of $2.08B. LFCF/market cap at 28.97%, given its levered free cash flow of 602.50M. TTM FOCF/Revenue is 5.57% vs. 3-yr average at 1.51% and 5-yr average at 0.13%. The stock is a short squeeze candidate, with a short float at 6.59% (equivalent to 9.29 days of average volume). The stock has gained 71.39% over the last year.

2. CNH Global NV (NYSE:CNH): Farm & Construction Machinery Industry. Market cap of $8.73B. LFCF/market cap at 26.4%, given its levered free cash flow of 2.31B. TTM FOCF/Revenue is 4.89% vs. 3-yr average at 3.4% and 5-yr average at 1.87%. This is a risky stock that is significantly more volatile than the overall market (beta = 2.55). The stock has performed poorly over the last month, losing 12.29%.

3. H&R Block, Inc. (NYSE:HRB): Personal Services Industry. Market cap of $4.70B. LFCF/market cap at 39.36%, given its levered free cash flow of 1.85B. TTM FOCF/Revenue is 38.61% vs. 3-yr average at 12.98% and 5-yr average at 1.82%. The stock has gained 1.85% over the last year.

4. MedAssets, Inc. (NASDAQ:MDAS): Healthcare Information Services Industry. Market cap of $792.41M. LFCF/market cap at 27.76%, given its levered free cash flow of 219.97M. TTM FOCF/Revenue is 17.9% vs. 3-yr average at 12.86% and 5-yr average at 3.1%. The stock is a short squeeze candidate, with a short float at 8.74% (equivalent to 7. days of average volume). The stock has performed poorly over the last month, losing 13.11%.

5. SUPERVALU Inc. (NYSE:SVU): Grocery Stores Industry. Market cap of $1.84B. LFCF/market cap at 37.58%, given its levered free cash flow of 691.50M. TTM FOCF/Revenue is 1.31% vs. 3-yr average at 1.04% and 5-yr average at 0.78%. The stock has performed poorly over the last month, losing 19.23%.

*Data sourced from Screener.co and Finviz

Source: Rebound Ideas: 5 Undervalued Stocks With Improving Operating Cash Flows