Looking for a hidden jewel in the market? Well sometimes the best times to look for them is when the market is manic and volatility is rampant. One way to find small cap stocks that may hold a large amount of potential is by looking at its Price/CFO Ratio. One unique characteristic of this ratio is that it accounts for non-cash factors and depreciation by removing them to provide a clearer picture of how much cash the firm is actually receiving from business operations.
We ran a screen for small cap stocks that appear undervalued according to their P/CFO Ratio (X<10). From this, narrowed pool we then screened for firms with strong liquidity (Current Ratio>2).
The list is ranked from the lowest to highest by the P/CFO Ratio.
1. Evercore Partners (EVR)
Sector | Financial Services |
Industry | Capital Markets |
Market Cap | $630M |
Beta | 1.09 |
The company is a boutique investment bank with a global presence. The firm's P/CFO Ratio is 8.83. The firm's Current Ratio is 2.01. The short interest is 7.90% as of 08/15/2011.
2. Stein Mart (SMRT)
Sector | Consumer Activity |
Industry | Apparel Stores |
Market Cap | $ 298M |
Beta | 3.01 |
A retailer store that offers prices competitive with off-price retail chains. The firm’s P/CFO Ratio is 4.28. The firm’s Current Ratio is 2.03. The short interest is 3.10% as of 08/15/2011.
3. Chiquita Brands International (CQB)
Sector | Consumer Defensive |
Industry | Farm Products |
Market Cap | $439M |
Beta | 2.12 |
The company operates and distributes fresh produce across the world. The firm’s P/CFO Ratio is 2.91. The firm’s Current Ratio is 2.04. The short interest is 14.90% as of 08/15/2011.
4. Prestige Brands Holdings Inc (PBH)
Sector | Consumer Defensive |
Industry | Household & Personal Products |
Market Cap | $511M |
Beta | 1.45 |
The company offers over-the-counter personal care, healthcare, and household cleaning brands to mass merchandisers, drug stores, supermarkets and more in North America. The firm’s P/CFO Ratio is 6.28. The firm’s Current Ratio is 2.05. The short interest is 4.70% as of 08/15/2011.
5. Sanmina-SCI Corp (SANM)
Sector | Technology |
Industry | Contract Manufacturers |
Market Cap | $613M |
Beta | 3.45 |
The company offers custom integrated electronics manufacturing services. The firm’s P/CFO Ratio is 5.18. The firm’s Current Ratio is 2.06. The short interest is 6.50% as of 08/15/2011.
6. CSG Systems International, Inc (CSGS)
Sector | Technology |
Industry | Software - Application |
Market Cap | $457M |
Beta | 0.75 |
The company is provides of outsourced billing, customer care and mail solutions in North America. The firm’s P/CFO Ratio is 6.69. The firm’s Current Ratio is 2.08. The short interest is 5.70% as of 08/15/2011.
7. Scientific Games Corporation (SGMS)
Sector | Consumer Cyclical |
Industry | Gambling |
Market Cap | $739M |
Beta | 1.75 |
The company is a supplier of technology-based products, systems and services to gaming markets worldwide. The firm’s P/CFO Ratio is 4.46. The firm’s Current Ratio is 2.08. The short interest is 8.70% as of 08/15/2011.
8. Boise Inc (BZ)
Sector | Basic Materials |
Industry | Paper & Paper Products |
Market Cap | $659M |
Beta | 3.96 |
The company's P/CFO Ratio is 1.99. The firm’s Current Ratio is 2.19. The short interest is 6.00% as of 08/15/2011.
9. Belo Corporation (BLC)
Sector | Consumer Cyclical |
Industry | Broadcasting - TV |
Market Cap | $533M |
Beta | 3.64 |
The company operates a group of television broadcasting, newspaper publishing, and other media outlets. The firm’s P/CFO Ratio is 4.64. The firm’s Current Ratio is 2.21. The short interest is 7.00% as of 08/15/2011.
10. Seaspan Corporation (SSW)
Sector | Industrials |
Industry | Shipping & Ports |
Market Cap | $857M |
Beta | 1.17 |
The company operates containerships worldwide. The firm’s P/CFO Ratio is 4.43. The firm’s Current Ratio is 2.21. The short interest is 4.10% as of 08/15/2011.
We hope this list helps investors as they do their own due diligence on small cap companies that appear undervalued.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
