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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.

Source: 10 Undervalued Stocks That Can Keep Beating the Market Despite the Odds