Some companies are refusing to provide guidance because there is a “lack of clarity” on multiple fronts. But what does that mean? In the real world, that’s code for not wanting to make a statement then being called out on it if it’s incorrect down the line. Thankfully though, some firms do have confidence in these uncertain times and so far have outperformed the indexes while still holding the potential to go even higher.
The Price / Cash Flow Ratio is a performance ratio. In some ways it’s similar to the P/E ratio but a key difference is that it removes items such as depreciation and other non-cash factors. This ratio helps indicate if a firm is potentially overvalued or undervalued.
The Operating Margin is a profitability ratio that tells Wall Street how much a company made before interest and taxes. When looking at this ratio it should be compared against the firm’s Operating Margin trend over time instead of being viewed in isolation.
We screened for companies that had outperformed the S&P 500 YTD and still had a low Price / CFO Ratio (X<10). From this narrowed pool we then screened out companies that had strong profitability (Operating Margin>20%). We did not screen out any sectors or industries.
1. Telecom Italia SpA (NYSE:TI)
Sector | Communication Services |
Industry | Telecom Services |
Market Cap | $21086M |
Beta | 0.96 |
Analyst Sentiment | 15/29 -List Hold/Neutral (Neutral) |
The company offers telephone and data services for wholesale and retail customers. The firm’s Price/Cash Flow is 1.84. TI’s Operating Margin is 20.89%. The firm’s YTD Return is -0.82%. The short interest for the firm is N/A as of 07/29/2011.
2. Cincinnati Bell Inc (NYSE:CBB)
Sector | Communication Services |
Industry | Telecom Services |
Market Cap | $635M |
Beta | 1.5 |
Analyst Sentiment | 7/10 -List Hold/Neutral (Neutral) |
The company offers voice communication services, regional wireless, and equipment. The firm’s Price/Cash Flow is 2.2. CBB’s Operating Margin is 21.74%. The firm’s YTD Return is 13.93%. The short interest for the firm is 11% as of 07/29/2011.
3. Stone Energy Corporation (NYSE:SGY)
Sector | Energy |
Industry | Oil & Gas E&P |
Market Cap | $1271M |
Beta | 2.86 |
Analyst Sentiment | 6/9 -List Buy/Outperform (Bullish) |
The company acquires, develops, operates, & produces oil and gas properties located in the Gulf of Mexico. The firm’s Price/Cash Flow is 2.69. SGY’s Operating Margin is 24.34%. The firm’s YTD Return is 16.33%. The short interest for the firm is 8% as of 07/29/2011.
4. Amsurg Corporation (NASDAQ:AMSG)
Sector | Healthcare |
Industry | Medical Care |
Market Cap | $665M |
Beta | 0.94 |
Analyst Sentiment | 9/13 -List Hold/Neutral (Neutral) |
The company acquires, develops, and operates surgery centers with physician groups. The firm’s Price/ Cash Flow is 2.78. AMSG’s Operating Margin is 32.27%. The YTD Return is 1.43%. Short interest for the firm is 7.70% as of 07/29/2011.
5. W&T Offshore Inc (NYSE:WTI)
Sector | Energy |
Industry | Oil & Gas E&P |
Market Cap | $1605M |
Beta | 1.67 |
Analyst Sentiment | 8/13 -List Hold/Neutral (Neutral) |
The company acquires, produces, and develops natural gas properties. The firm’s Price/Cash Flow is 3.53. WTI’s Operating Margin is 23.63%. The firm’s YTD Return is 21.04%. The short interest for the firm is 24.7% as of 07/29/2011. Given the short interest, this firm may be a short favorite or potentially a great short squeeze.
6. Sinclair Broadcast Group, Inc. (NASDAQ:SBGI)
Sector | Consumer Cyclical |
Industry | Broadcasting – TV |
Market Cap | $622M |
Beta | 2 |
Analyst Sentiment | 4/5 -List Buy/Outperform (Bullish) |
The company offers a variety of programming services and operates more television stations than any other competitor in the U.S. The firm’s Price/Cash Flow is 3.94.The SBGI’s Operating Margin is 31.33%. The firm’s YTD Return is -3.18%. The short interest for the firm is 7% as of 07/29/2011.
7. ITT Educational Services, Inc. (NYSE:ESI)
Sector | Consumer Defensive |
Industry | Education & Training Services |
Market Cap | $2051M |
Beta | 0.21 |
Analyst Sentiment | 15/19 -List Buy/Outperform (Bullish) |
The company offers post-secondary education services in the U.S. This is a for-profit firm. The firm’s Price/ Cash Flow is 4.14. ESI’s Operating Margin is 38.43%. ESI’s YTD Return is 19.16%. The short interest for the firm is 65.50% as of 07/29/2011. Given the short interest, this firm may be a short favorite or potentially a great short squeeze.
8. National Grid PLC (NYSE:NGG)
Sector | Utilities |
Industry | Utilities - Regulated Electric |
Market Cap | $36272M |
Beta | 0.65 |
Analyst Sentiment | NA |
The company operates gas and regulated electricity infrastructure networks in the U.S. & the UK. The firm’s Price/Cash Flow is 4.23. NGG’s Operating Margin is 20%. The short interest for the firm is N/A as of 07/29/2011.
9. Plains Exploration & Productio (NYSE:PXP)
Sector | Energy |
Industry | Oil & Gas E&P |
Market Cap | $4488M |
Beta | 1.28 |
Analyst Sentiment | 13/16 -List Buy/Outperform (Bullish) |
The company independently acquires, develops, and operates oil & gas properties in the U.S. The firm’s Price/Cash Flow is 4.47. PXP’s Operating Margin is 23.19%. The firm’s YTD Return is -0.96%. The short interest for the firm is 5% as of 07/29/2011.
10. NTT DoCoMo, Inc. (NYSE:DCM)
Sector | Communication Services |
Industry | Telecom Services |
Market Cap | $76798M |
Beta | 0.23 |
Analyst Sentiment | 11/17 -List Buy/Outperform (Bullish) |
The company offers telecommunication services such as PHS services, second generation and third generation cellular services, and more. The firm’s Price/Cash Flow is 4.48. DCM’s Operating Margin is 20%. The firm’s YTD Return is 6.31%. The short interest for the firm is N/A as of 07/29/2011.
We hope this list helps as investors do their own due diligence on profitable undervalued companies with the potenial to keep beating the market .
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
