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One way to find potentially undervalued stocks is by searching for stocks that are trading at significant discounts to their mean analyst target price. Although target price does have an upward bias, steep discounts may indicate undervalued opportunities.

We ran a screen on technically oversold stocks (with RSI(14) below 40) that are trading at steep discounts to their mean analyst target price. We then screened for stocks that are seeing high growth in cash flow, comparing trailing-twelve-month operating cash flow/common equity to the company’s five-year average.

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.



List sorted by potential upside implied by target price.

1. Cedar Fair LP (NYSE:FUN): General Entertainment Industry. Market cap of $1.04B. RSI(14) at 23.22. Target price at $25.50 vs. current price at $18.76 (implies a potential upside of 35.93%). TTM operating cash flow/common equity at 2.10 vs. 5-year average at 0.77. It's been a rough couple of days for the stock, losing 6.34% over the last week.

2. Teradyne Inc. (NYSE:TER): Semiconductor Equipment & Materials Industry. Market cap of $2.39B. RSI(14) at 30.19. Target price at $17.46 vs. current price at $12.91 (implies a potential upside of 35.23%). TTM operating cash flow/common equity at 0.49 vs. 5-year average at 0.28. Might be undervalued at current levels, with a PEG ratio at 0.89, and P/FCF ratio at 5.1. The stock is a short squeeze candidate, with a short float at 11.54% (equivalent to 6.17 days of average volume). It's been a rough couple of days for the stock, losing 6.18% over the last week.

3. Marriott International, Inc. (NASDAQ:MAR): Lodging Industry. Market cap of $10.99B. RSI(14) at 26.23. Target price at $41.68 vs. current price at $31.13 (implies a potential upside of 33.89%). TTM operating cash flow/common equity at 0.94 vs. 5-year average at 0.49. The stock is currently stuck in a downtrend, trading 13.48% below its SMA20, 14.83% below its SMA50, and 20.51% below its SMA200. It's been a rough couple of days for the stock, losing 6.74% over the last week.

4. VeriSign Inc. (NASDAQ:VRSN): Application Software Industry. Market cap of $5.12B. RSI(14) at 26.50. Target price at $40.50 vs. current price at $30.41 (implies a potential upside of 33.18%). TTM operating cash flow/common equity at 0.91 vs. 5-year average at 0.33. The stock is currently stuck in a downtrend, trading 9.72% below its SMA20, 11.45% below its SMA50, and 9.67% below its SMA200. It's been a rough couple of days for the stock, losing 7.03% over the last week.

5. ICICI Bank Ltd. (NYSE:IBN): Foreign Regional Banks Industry. Market cap of $26.15B. RSI(14) at 34.40. Target price at $60.04 vs. current price at $45.09 (implies a potential upside of 33.16%). TTM operating cash flow/common equity at 0.60 vs. 5-year average at 0.25. This is a risky stock that is significantly more volatile than the overall market (beta = 2.25). The stock has gained 10.46% over the last year.

6. Coinstar Inc. (CSTR): Specialty Retail, Other Industry. Market cap of $1.49B. RSI(14) at 33.31. Target price at $62.92 vs. current price at $47.47 (implies a potential upside of 32.54%). TTM operating cash flow/common equity at 0.73 vs. 5-year average at 0.45. The stock is a short squeeze candidate, with a short float at 34.01% (equivalent to 10.08 days of average volume). It's been a rough couple of days for the stock, losing 5.66% over the last week.

7. Tenneco Inc. (NYSE:TEN): Auto Parts Industry. Market cap of $2.35B. RSI(14) at 30.94. Target price at $50.44 vs. current price at $38.87 (implies a potential upside of 29.78%). TTM operating cash flow/common equity at 5.96 vs. 5-year average at 2.39. This is a risky stock that is significantly more volatile than the overall market (beta = 3.27). The stock is currently stuck in a downtrend, trading 16.32% below its SMA20, 14.05% below its SMA50, and 12.5% below its SMA200. The stock has performed poorly over the last month, losing 14.21%.

8. Stone Energy Corp. (NYSE:SGY):
Independent Oil & Gas Industry. Market cap of $1.54B. RSI(14) at 38.72. Target price at $40.29 vs. current price at $31.52 (implies a potential upside of 27.81%). TTM operating cash flow/common equity at 1.06 vs. 5-year average at 0.73. This is a risky stock that is significantly more volatile than the overall market (beta = 2.52). The stock has gained 126.76% over the last year.

Operating cash flow/common equity data and target price 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: 8 Undervalued, Oversold Stocks With Strong Cash-Flow Growth