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When a company’s P/E ratio has fallen over time, while earnings steadily rise, it is a sign that price has not proportionately increased with earnings. In other words, the earnings may not be fully priced into the stock, and the stock may be undervalued.

Looking to the knowledge of the “smart money,” we screened for stocks exhibiting this behavior while being significantly bought up by institutional investors during the current quarter. We then screened for companies with low debt (i.e. most recent quarter total debt to assets below 0.2).

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.
(Click chart to enlarge)


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

List sorted by market cap.

  1. Wells Fargo & Company (NYSE:WFC): Money Center Banks Industry. Market cap of $151.64B. During the current quarter, institutional investors have been net buyers of 249.6M shares, which represents 5.05% of the company's 4.94B share float. TTM [trailing twelve month]P/E at 11.83 vs. 3-year average at 17.54. Last year diluted EPS [earnings per share] at $2.21 vs. two years prior EPS at $0.70. MRQ [most recent quarter] total debt/total assets at 0.1634. The stock has had a couple of great days, gaining 5.17% over the last week.

  2. Visa, Inc. (NYSE:V): Business Services Industry. Market cap of $73.02B. During the current quarter, institutional investors have been net buyers of 7.8M shares, which represents 1.49% of the company's 523.41M share float. TTM P/E at 22.53 vs. 3-year average at 30.49. Last year diluted EPS at $3.54 vs. two years prior EPS at $0.91. MRQ total debt/total assets at 0.0011. The stock has had a couple of great days, gaining 19.9% over the last week.

  3. PNC Financial Services Group Inc. (NYSE:PNC): Money Center Banks Industry. Market cap of $32.05B. During the current quarter, institutional investors have been net buyers of 4.9M shares, which represents 0.94% of the company's 522.82M share float. TTM P/E at 10.20 vs. 3-year average at 14.72. Last year diluted EPS at $5.04 vs. two years prior EPS at $2.46. MRQ total debt/total assets at 0.1156. The stock has had a couple of great days, gaining 7.56% over the last week.

  4. Yahoo! Inc. (NASDAQ:YHOO): Internet Information Providers Industry. Market cap of $20.13B. During the current quarter, institutional investors have been net buyers of 45.4M shares, which represents 3.85% of the company's 1.18B share float. TTM P/E at 18.20 vs. 3-year average at 32.28. Last year diluted EPS at $0.90 vs. two years prior EPS at $0.29. MRQ total debt/total assets at 0.0093. The stock has lost 7.1% over the last year.

  5. Loews Corporation (NYSE:L): Property & Casualty Insurance Industry. Market cap of $17.22B. During the current quarter, institutional investors have been net buyers of 3.1M shares, which represents 0.98% of the company's 316.58M share float. TTM P/E at 13.82 vs. 3-year average at 29.98. Last year diluted EPS at $3.12 vs. two years prior EPS at -$0.38. MRQ total debt/total assets at 0.1250. The stock has gained 8.58% over the last year.

  6. TIM Participacoes S.A. (NYSE:TSU): Wireless Communications Industry. Market cap of $12.27B. During the current quarter, institutional investors have been net buyers of 5.7M shares, which represents 7.20% of the company's 79.14M share float. TTM P/E at 8.21 vs. 3-year average at 27.49. Last year diluted EPS at $1.65 vs. two years prior EPS at -$0.01. MRQ total debt/total assets at 0.1654. The stock has gained 48.98% over the last year.

  7. IAMGOLD Corp. (NYSE:IAG): Gold Industry. Market cap of $6.91B. During the current quarter, institutional investors have been net buyers of 9.3M shares, which represents 2.95% of the company's 315.62M share float. TTM P/E at 18.45 vs. 3-year average at 41.54. Last year diluted EPS at $0.54 vs. two years prior EPS at -$0.08. MRQ total debt/total assets at 0.0029. The stock has performed poorly over the last month, losing 10.4%.

  8. Cephalon Inc. (NASDAQ:CEPH): Biotechnology Industry. Market cap of $6.11B. During the current quarter, institutional investors have been net buyers of 1.3M shares, which represents 1.88% of the company's 69.09M share float. TTM P/E at 12.24 vs. 3-year average at 18.22. Last year diluted EPS at $5.27 vs. two years prior EPS at $2.92. MRQ total debt/total assets at 0.1981. The stock has gained 29.91% over the last year.

  9. Williams-Sonoma Inc. (NYSE:WSM): Home Furnishing Stores Industry. Market cap of $3.80B. During the current quarter, institutional investors have been net buyers of 2.6M shares, which represents 2.76% of the company's 94.12M share float. TTM P/E at 18.53 vs. 3-year average at 22.54. Last year diluted EPS at $1.83 vs. two years prior EPS at $0.28. MRQ total debt/total assets at 0.0043. The stock has gained 2.85% over the last year.

  10. AMERIGROUP Corporation (AGP): Health Care Plans Industry. Market cap of $3.59B. During the current quarter, institutional investors have been net buyers of 809.3K shares, which represents 1.67% of the company's 48.42M share float. TTM P/E at 12.15 vs. 3-year average at 15.07. Last year diluted EPS at $5.40 vs. two years prior EPS at -$0.96. MRQ total debt/total assets at 0.1299. The stock has had a couple of great days, gaining 12.37% over the last week.

  11. Ingram Micro Inc. (NYSE:IM): Computers Wholesale Industry. Market cap of $2.95B. During the current quarter, institutional investors have been net buyers of 4.6M shares, which represents 3.03% of the company's 151.73M share float. TTM P/E at 9.83 vs. 3-year average at 82.73. Last year diluted EPS at $1.94 vs. two years prior EPS at -$2.37. MRQ total debt/total assets at 0.0759. The stock has had a couple of great days, gaining 5.42% over the last week.

  12. Fulton Financial Corp. (NASDAQ:FULT): Regional Banks Industry. Market cap of $2.20B. During the current quarter, institutional investors have been net buyers of 5.6M shares, which represents 2.86% of the company's 195.58M share float. TTM P/E at 17.30 vs. 3-year average at 30.63. Last year diluted EPS at $0.59 vs. two years prior EPS at -$0.03. MRQ total debt/total assets at 0.0260. The stock has gained 7.61% over the last year.

  13. OmniVision Technologies Inc. (NASDAQ:OVTI): Semiconductor Circuits Industry. Market cap of $2.04B. During the current quarter, institutional investors have been net buyers of 2.1M shares, which represents 3.61% of the company's 58.24M share float. TTM P/E at 16.55 vs. 3-year average at 50.95. Last year diluted EPS at $2.11 vs. two years prior EPS at -$0.74. MRQ total debt/total assets at 0.0447. The stock has had a couple of great days, gaining 12.01% over the last week.

  14. TriQuint Semiconductor, Inc. (NASDAQ:TQNT): Semiconductor Circuits Industry. Market cap of $1.66B. During the current quarter, institutional investors have been net buyers of 10.6M shares, which represents 6.50% of the company's 163.18M share float. TTM P/E at 8.81 vs. 3-year average at 22.33. Last year diluted EPS at $1.17 vs. two years prior EPS at -$0.10. MRQ total debt/total assets at 0.0000. The stock has performed poorly over the last month, losing 18.37%.

  15. 99 (NYSE:NDN): Discount, Variety Stores Industry. Market cap of $1.44B. During the current quarter, institutional investors have been net buyers of 7.5M shares, which represents 15.93% of the company's 47.07M share float. TTM P/E at 19.57 vs. 3-year average at 25.43. Last year diluted EPS at $1.05 vs. two years prior EPS at $0.12. MRQ total debt/total assets at 0.0005. The stock is a short squeeze candidate, with a short float at 10.96% (equivalent to 9.02 days of average volume). The stock has gained 28.48% over the last year.



*Institutional data sourced from Fidelity, P/E and EPS 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.

Source: 15 Low-Debt, Falling P/E Stocks Being Snapped Up by Institutions