9 Undervalued S&P 500 Stocks Being Bought Up By The Smart Money

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Includes: AMD, CF, CLF, DO, FSLR, LEN, TER, TSO, URBN
by: Kapitall

Analysts follow the buying trends of institutional investors such as hedge fund managers and mutual fund managers (a.k.a. the “smart money”) because they have access to sophisticated research and have a lot of experience choosing investments.

We ran a screen on stocks from the S&P 500 that appear undervalued to earnings growth, with PEG below 1. We screened these stocks for those seeing significant net buying from institutional investors over the current quarter.

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.


(Click to enlarge)

Do you think these stocks should be trading higher? Use this list as a starting-off point for your own analysis.

List sorted by net institutional purchases as a percent of share float.

1. Diamond Offshore Drilling Inc. (NYSE:DO): Operates as an offshore oil and gas drilling contractor worldwide. Market cap of $8.02B. PEG at 0.74. Net institutional shares purchased over the current quarter at 8.3M, which is 12.05% of the company's 68.90M share float. The stock is a short squeeze candidate, with a short float at 8.16% (equivalent to 5.24 days of average volume). It's been a rough couple of days for the stock, losing 8.92% over the last week.

2. Urban Outfitters Inc. (NASDAQ:URBN): Operates lifestyle specialty retail stores under the Urban Outfitters, Anthropologie, Free People, Terrain, Leifsdottir, and BHLDN brands. Market cap of $3.60B. PEG at 0.84. Net institutional shares purchased over the current quarter at 8.1M, which is 7.77% of the company's 104.27M share float. It's been a rough couple of days for the stock, losing 5.72% over the last week.

3. First Solar, Inc. (NASDAQ:FSLR): Manufactures and sells solar modules using a thin-film semiconductor technology. Market cap of $6.06B. PEG at 0.60. Net institutional shares purchased over the current quarter at 4.6M, which is 7.73% of the company's 59.51M share float. The stock is a short squeeze candidate, with a short float at 29.01% (equivalent to 7.97 days of average volume). It's been a rough couple of days for the stock, losing 18.04% over the last week.

4. Tesoro Corporation (NYSE:TSO): Engages in refining and marketing petroleum products in the United States. Market cap of $2.72B. PEG at 0.23. Net institutional shares purchased over the current quarter at 9.9M, which is 7.03% of the company's 140.85M share float. The stock is currently stuck in a downtrend, trading 17.8% below its SMA20, 15.73% below its SMA50, and 16.29% below its SMA200. It's been a rough couple of days for the stock, losing 20.19% over the last week.

5. Cliffs Natural Resources Inc. (NYSE:CLF): Produces iron ore pellets, lump and fines iron ore, and metallurgical coal products. Market cap of $8.45B. PEG at 0.27. Net institutional shares purchased over the current quarter at 9.6M, which is 6.62% of the company's 145.11M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.37). It's been a rough couple of days for the stock, losing 25.79% over the last week.

6. Advanced Micro Devices, Inc. (NYSE:AMD): Operates as a semiconductor company in the United States, Japan, China, and Europe. Market cap of $4.27B. PEG at 0.64. Net institutional shares purchased over the current quarter at 37.7M, which is 6.46% of the company's 583.30M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.12). It's been a rough couple of days for the stock, losing 14.31% over the last week.

7. CF Industries Holdings, Inc. (NYSE:CF): Manufactures and distributes nitrogen and phosphate fertilizer products, serving agricultural and industrial customers worldwide. Market cap of $10.45B. PEG at 0.86. Net institutional shares purchased over the current quarter at 3.9M, which is 5.46% of the company's 71.44M share float. Might be undervalued at current levels, with a PEG ratio at 0.86, and P/FCF ratio at 5.86. It's been a rough couple of days for the stock, losing 16.82% over the last week.

8. Lennar Corp. (NYSE:LEN): Operates as a home builder and provider of financial services in the United States. Market cap of $2.51B. PEG at 0.76. Net institutional shares purchased over the current quarter at 5.3M, which is 3.31% of the company's 160.27M share float. The stock is a short squeeze candidate, with a short float at 18.93% (equivalent to 6.43 days of average volume). The stock has lost 11.26% over the last year.

9. Teradyne Inc. (NYSE:TER): Provides automatic test equipment products and services worldwide. Market cap of $2.12B. PEG at 0.48. Net institutional shares purchased over the current quarter at 5.8M, which is 3.13% of the company's 185.43M share float. It's been a rough couple of days for the stock, losing 10.65% over the last week.

*Institutional data sourced from Fidelity, 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.