Stock investors should always keep company debt in mind. High levels of debt can put a wedge between firm value and the value to shareholders by directing cash flows towards high interest payments, and by decreasing financial flexibility. After all, debtholders are always paid before dividends.
We ran a screen on companies with low debt, with most recent quarter total debt to assets under 0.20, that appear undervalued to cash flow, with P/CF under 5. We also screened for those that have seen a bullish change in options sentiment, with a significant decrease in put/call ratio over the last ten trading days.
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.
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 options traders are calling it right? Use this list as a starting-off point for your own analysis.
List sorted by market cap.
1. Statoil ASA (NYSE:STO): Oil & Gas Drilling & Exploration Industry. Market cap of $80.35B. P/CF at 4.65. MRQ total debt to assets at 0.17. Put/call ratio decreased 29.69% over the last ten trading days (from 0.64 to 0.45). The stock has had a couple of great days, gaining 5.53% over the last week.
2. American International Group, Inc. (NYSE:AIG): Property & Casualty Insurance Industry. Market cap of $54.91B. P/CF at 1.18. MRQ total debt to assets at 0.13. Put/call ratio decreased 3.28% over the last ten trading days (from 0.61 to 0.59). The stock has lost 5.33% over the last year.
3. TIM Participacoes S.A. (NYSE:TSU): Wireless Communications Industry. Market cap of $12.32B. P/CF at 3.80. MRQ total debt to assets at 0.17. Put/call ratio decreased 24.24% over the last ten trading days (from 1.32 to 1). The stock is a short squeeze candidate, with a short float at 5.97% (equivalent to 6.23 days of average volume). The stock has gained 87.3% over the last year.
4. LG Display Co., Ltd. (NYSE:LPL): Diversified Electronics Industry. Market cap of $10.41B. P/CF at 3.21. MRQ total debt to assets at 0.10. Put/call ratio decreased 52.02% over the last ten trading days (from 1.98 to 0.95). The stock has had a couple of great days, gaining 11.75% over the last week.
*Options data sourced from Schaeffer’s, debt to assets 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.