Company debt should always be a consideration in stock analysis, especially because debt is a wedge between firm value and a firm's value to shareholders.
Since debtholders are always paid before shareholder dividends, excessive levels of debt can lower the value of shareholders' investment.
We ran a screen on low-debt companies, with most recent quarter total debt to assets below 0.2. We screened these companies for those that appear undervalued to trailing-twelve-month cash flow, with P/CF below 5. We then screened for stocks trading below $5.
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 the market is undervaluing these stocks? Use this list as a starting-off point for your own analysis.
List sorted by market cap.
1. United Microelectronics Corporation (UMC): Semiconductor Equipment & Materials Industry. Market cap of $4.96B. P/CF at 2.66 (price at $1.90 and TTM cash flow per share at $0.71). MRQ total debt to assets at 0.08. The stock is currently stuck in a downtrend, trading 9.76% below its SMA20, 13.8% below its SMA50, and 25.05% below its SMA200. It's been a rough couple of days for the stock, losing 6.4% over the last week.
2. Popular Inc. (BPOP): Foreign Regional Banks Industry. Market cap of $2.05B. P/CF at 4.52 (price at $2.00 and TTM cash flow per share at $0.44). MRQ total debt to assets at 0.16. The stock is currently stuck in a downtrend, trading 10.48% below its SMA20, 18.85% below its SMA50, and 29.09% below its SMA200. It's been a rough couple of days for the stock, losing 12.66% over the last week.
3. Entropic Communications, Inc. (ENTR): Semiconductor Industry. Market cap of $343.25M. P/CF at 4.11 (price at $3.97 and TTM cash flow per share at $0.97). MRQ total debt to assets at 0.00. This is a risky stock that is significantly more volatile than the overall market (beta = 2.6). The stock is a short squeeze candidate, with a short float at 28.39% (equivalent to 7.87 days of average volume). It's been a rough couple of days for the stock, losing 6.37% over the last week.
4. Sun Healthcare Group Inc. (SUNH): Long-Term Care Facilities Industry. Market cap of $245.34M. P/CF at 2.41 (price at $3.28 and TTM cash flow per share at $1.36). MRQ total debt to assets at 0.14. The stock is currently stuck in a downtrend, trading 36.81% below its SMA20, 53.15% below its SMA50, and 69.61% below its SMA200. The stock has performed poorly over the last month, losing 58.43%.
*P/CF and total 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.