Seeking Alpha
Value, growth, long-term horizon, medium-term horizon
Profile| Send Message|
( followers)  

Are you interested in stocks priced on the lower end? If so, this list may be an interesting place to start your search.

While penny stocks are more volatile, they can present an opportunity to buy low before a company increases its revenue...To create a list of potentially undervalued stocks we searched for names with market caps above $100M and price under $5.

Then, to find the names that were most undervalued, we narrowed down the list to those with the highest Levered Free Cash Flow to Enterprise value ratio (LFCF/EV).

Enterprise Value (EV) is the sum of the firm’s value from all ownership sources: market cap, outstanding debt, and preferred shares (i.e. the theoretical takeover value). Levered Free Cash Flow (LFCF) is the amount of cash available to stockholders after interest payments on debts are made. By finding the LFCF/EV ratio, we can identify the most undervalued stocks.

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.

Do you think these penny stocks have the potential for upward momentum? Use the list below as a starting point for your own analysis.

1. Trident Microsystems Inc. (TRID): Semiconductor Industry. Market cap of $126.69M. Price at $0.72. LFCF at 26.77M vs. EV at 57.03M (implies a LFCF/EV of 46.94%). The stock is a short squeeze candidate, with a short float at 5.53% (equivalent to 5.7 days of average volume). It's been a rough couple of days for the stock, losing 18.39% over the last week.

2. Spartan Motors Inc. (NASDAQ:SPAR): Trucks & Other Vehicles Industry. Market cap of $141.36M. Price at $4.2. LFCF at 44.28M vs. EV at 121.60M (implies a LFCF/EV of 36.41%). The stock is a short squeeze candidate, with a short float at 5.77% (equivalent to 10.76 days of average volume). The stock has performed poorly over the last month, losing 18.77%.

3. CDC Software Corporation (CDCS): Application Software Industry. Market cap of $128.94M. Price at $4.65. LFCF at 32.84M vs. EV at 92.56M (implies a LFCF/EV of 35.48%). The stock has lost 41.57% over the last year.

4. Eastman Kodak Co. (EK): Photographic Equipment & Supplies Industry. Market cap of $906.66M. Price at $3.47. LFCF at 365.88M vs. EV at 1.05B (implies a LFCF/EV of 34.85%). The stock has lost 37.01% over the last year.

5. China HGS Real Estate Inc. (NASDAQ:HGSH): Business Services Industry. Market cap of $109.02M. Price at $2.42. LFCF at 26.04M vs. EV at 88.47M (implies a LFCF/EV of 29.43%).

6. Pulse Electronics Corporation (OTCPK:PULS): Diversified Electronics Industry. Market cap of $181.53M. Price at $4.34. LFCF at 61.74M vs. EV at 234.49M (implies a LFCF/EV of 26.33%). The stock is a short squeeze candidate, with a short float at 9.11% (equivalent to 22.21 days of average volume). TThe stock has performed poorly over the last month, losing 15.81%.

7. Online Resources Corp. (NASDAQ:ORCC): Internet Software & Services Industry. Market cap of $105.41M. Price at $3.23. LFCF at 26.74M vs. EV at 109.81M (implies a LFCF/EV of 24.35%). The stock has had a couple of great days, gaining 8.14% over the last week.

8. SuperGen Inc. (SUPG): Drug Manufacturers Industry. Market cap of $175.07M. Price at $2.93. LFCF at 12.09M vs. EV at 50.11M (implies a LFCF/EV of 24.13%). The stock is a short squeeze candidate, with a short float at 5.86% (equivalent to 6.61 days of average volume). The stock has gained 29.46% over the last year.

9. ReneSola Ltd. (NYSE:SOL): Semiconductor Industry. Market cap of $428.17M. Price at $4.6. LFCF at 156.96M vs. EV at 732.97M (implies a LFCF/EV of 21.41%). This is a risky stock that is significantly more volatile than the overall market (beta = 2.99). The stock is currently stuck in a downtrend, trading -26.51% below its SMA20, -40.77% below its SMA50, and -53.05% below its SMA200.

10. EnergySolutions, Inc (NYSE:ES): Waste Management Industry. Market cap of $420.77M. Price at $4.71. LFCF at 209.90M vs. EV at 1.08B (implies a LFCF/EV of 19.44%). The stock is a short squeeze candidate, with a short float at 7.56% (equivalent to 5.4 days of average volume). The stock has performed poorly over the last month, losing 11.57%.

11. Dex One Corporation (DEXO): Publishing Industry. Market cap of $105.13M. Price at $2.95. LFCF at 409.74M vs. EV at 2.62B (implies a LFCF/EV of 15.64%). The stock is a short squeeze candidate, with a short float at 12.1% (equivalent to 9.14 days of average volume). The stock has performed poorly over the last month, losing 16.%.

12. Crown Media Holdings Inc. (NASDAQ:CRWN): CATV Systems Industry. Market cap of $593.47M. Price at $1.67. LFCF at 149.70M vs. EV at 980.30M (implies a LFCF/EV of 15.27%). The stock is a short squeeze candidate, with a short float at 13.59% (equivalent to 33.61 days of average volume). It's been a rough couple of days for the stock, losing 5.17% over the last week.

13. Allied Healthcare International Inc. (NASDAQ:AHCI): Home Health Care Industry. Market cap of $105.0M. Price at $2.42. LFCF at 9.73M vs. EV at 64.43M (implies a LFCF/EV of 15.1%). The stock has had a couple of great days, gaining 6.17% over the last week. The stock has performed poorly over the last month, losing 10.07%.

14. China Green Agriculture, Inc. (NYSE:CGA): Agricultural Chemicals Industry. Market cap of $104.18M. Price at $3.94. LFCF at 5.71M vs. EV at 40.10M (implies a LFCF/EV of 14.24%). The stock is a short squeeze candidate, with a short float at 17.29% (equivalent to 12.26 days of average volume). The stock has performed poorly over the last month, losing 41.48%.

15. Tellabs Inc. (NASDAQ:TLAB): Communication Equipment Industry. Market cap of $1.48B. Price at $4.05. LFCF at 59.88M vs. EV at 421.41M (implies a LFCF/EV of 14.21%). The stock has performed poorly over the last month, losing 10.75%.

16. New York & Company Inc. (NYSE:NWY): Apparel Stores Industry. Market cap of $271.96M. Price at $4.33. LFCF at 31.61M vs. EV at 234.42M (implies a LFCF/EV of 13.48%). This is a risky stock that is significantly more volatile than the overall market (beta = 2.84). The stock has performed poorly over the last month, losing 23.65%.

17. Journal Communications Inc. (NYSE:JRN): Publishing Industry. Market cap of $278.76M. Price at $4.95. LFCF at 46.19M vs. EV at 348.74M (implies a LFCF/EV of 13.24%). This is a risky stock that is significantly more volatile than the overall market (beta = 3.09). The stock has gained 2.49% over the last year.

18. Charming Shoppes Inc. (NASDAQ:CHRS): Apparel Stores Industry. Market cap of $441.75M. Price at $4.07. LFCF at 52.12M vs. EV at 401.22M (implies a LFCF/EV of 12.99%). This is a risky stock that is significantly more volatile than the overall market (beta = 3.45). The stock has lost 7.32% over the last year.

19. The Talbots Inc. (NYSE:TLB): Apparel Stores Industry. Market cap of $217.76M. Price at $3.16. LFCF at 34.07M vs. EV at 295.99M (implies a LFCF/EV of 11.51%). The stock has performed poorly over the last month, losing 38.89%.

20. Axcelis Technologies Inc. (NASDAQ:ACLS): Semiconductor Equipment & Materials Industry. Market cap of $160.21M. Price at $1.5. LFCF at 11.97M vs. EV at 115.42M (implies a LFCF/EV of 10.37%). This is a risky stock that is significantly more volatile than the overall market (beta = 2.44). It's been a rough couple of days for the stock, losing 6.21% over the last week.

21. Metropolitan Health Networks Inc. (MDF): Health Care Plans Industry. Market cap of $198.92M. Price at $4.78. LFCF at 15.48M vs. EV at 151.87M (implies a LFCF/EV of 10.19%). Might be undervalued at current levels, with a PEG ratio at 0.77, and P/FCF ratio at 11.55. The stock has had a couple of great days, gaining 5.22% over the last week.

*Levered free cashflows and enterprise values sourced from Yahoo Finance, rest of data sourced from Finviz

Source: Momentum Ideas: Top 21 Stocks Under $5 Undervalued by Enterprise Value