If you’re looking for momentum ideas that offer a high yield income, using the Levered Free Cashlow / Enterprise Value (LFCF/EV) ratio on rallying stocks might offer an interesting starting place for your analysis.
All of the stocks listed below meet the following criteria:
- Market cap above $300M
- Dividend yield above 5%
- Rallying above 20-day, 50-day and 200-day moving averages
- Undervalued by the Levered Free Cash Flow / Enterprise Value ratio (LFCF/EV)
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.
LFCF/EV provides a metric considered to be more accurate than market capitalization to determine a company's value. It works by comparing a company’s estimated takeover cost after cash and expenses are deducted (EV) with its levered free cash flow (FLCF), or the amount of cash available to stockholders after interest payments on debt are made.
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.
With this in mind, do you feel these companies are truly undervalued? Do they have the potential for more upward momentum? Use the data below to draw your own conclusions.
List sorted by LFCF/EV ratio.
1. Lincoln Educational Services Corporation (NASDAQ:LINC): Education and Training Services Industry. Market cap of $415.25M. Dividend yield at 5.44%. The stock is rallying 17.05% above its 20-day MA, 20.41% above its 50-day MA, and 25.94% above its 200-day MA. Levered free cash flow at 76.59M vs. enterprise value at 408.44M (implies a LFCF/EV of 18.75%). The stock has had a couple of great days, gaining 14.72% over the last week.
2. Vivo Participacoes S.A. (NYSE:VIV): Wireless Communications Industry. Market cap of $11.71B. Dividend yield at 9.36%. The stock is rallying 1.44% above its 20-day MA, 4.31% above its 50-day MA, and 21.4% above its 200-day MA. Levered free cash flow at 2.65B vs. enterprise value at 14.93B (implies a LFCF/EV of 17.75%). The stock has gained 15.31% over the last year.
3. Calumet Specialty Products Partners LP (NASDAQ:CLMT): Oil and Gas Refining and Marketing Industry. Market cap of $862.03M. Dividend yield at 8.77%. The stock is rallying 2.23% above its 20-day MA, 2.57% above its 50-day MA, and 5.33% above its 200-day MA. Levered free cash flow at 173.58M vs. enterprise value at 1.18B (implies a LFCF/EV of 14.71%). The stock has gained 3.44% over the last year.
4. USA Mobility, Inc. (USMO): Wireless Communications Industry. Market cap of $344.76M. Dividend yield at 6.41%. The stock is rallying 0.98% above its 20-day MA, 1.84% above its 50-day MA, and 0.72% above its 200-day MA. Levered free cash flow at 41.00M vs. enterprise value at 373.27M (implies a LFCF/EV of 10.98%). The stock is a short squeeze candidate, with a short float at 8.39% (equivalent to 8.89 days of average volume). The stock has gained 5.26% over the last year.
*Dividend growth rates sourced from Reuters, levered free cash flow data sourced from Yahoo Finance, rest of 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.