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It's official! The U.S. market is now in bear market territory. This raises an important question: How can you prepare yourself for more market losses?

For ideas we went back into time, and identified a list of stocks that outperformed the market during each of the last three big market downturns over the last decade (between 10/01/2007 - 03/02/2009, 04/19/2010 - 06/28/2010, and 07/18/2011 to the present day).

For each stock we'll list the alpha, i.e. outperformance, relative to the S&P500 index, a benchmark for our analysis.

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.

In addition, all of these stocks are deeply undervalued, when comparing levered free cash flow to enterprise value (i.e. the LFCF/EV ratio).

Considering the track record of these companies during downturns, and the attractive valuations, are these companies worth a closer look?

Use this list as a starting point for your own analysis.

1. Mediware Information Systems Inc. (NASDAQ:MEDW): Mediware Information Systems, Inc. and its subsidiaries develop, market, license, implement, and support clinical management and performance management information software systems and solutions in the United States and the United Kingdom. Between 10/01/2007 and 03/02/2009: Price changed from $6.99 to $4.25, a price return of -39.2% (alpha of 15.5%). Between 04/19/2010 to 06/28/2010: Price changed from $8.84 to $9.22, a price return of 4.3% (alpha of 14.57%). Between 07/18/2011 and 09/18/2011: Price changed from $11 to $11.1, a price return of 0.91% (alpha of 7.76%). [Average Alpha During Downturns: 12.61%] Levered free cash flow at $7.27M vs. enterprise value at $62.51M (implies a LFCF/EV ratio at 11.63%).

2. Unico American Corp. (NASDAQ:UNAM): Unico American Corporation, an insurance holding company, underwrites property and casualty insurance. Between 10/01/2007 and 03/02/2009: Price changed from $10.42 to $6.59, a price return of -36.76% (alpha of 17.94%). Between 04/19/2010 to 06/28/2010: Price changed from $9.03 to $8.91, a price return of -1.33% (alpha of 8.94%). Between 07/18/2011 and 09/18/2011: Price changed from $10.17 to $10.76, a price return of 5.8% (alpha of 12.65%). [Average Alpha During Downturns: 13.18%] Levered free cash flow at $6.36M vs. enterprise value at $42.64M (implies a LFCF/EV ratio at 14.92%).

3. Meadowbrook Insurance Group Inc. (NYSE:MIG): Operates as a specialty commercial insurance underwriter and insurance administration services company in the United States. Between 10/01/2007 and 03/02/2009: Price changed from $8.72 to $5.58, a price return of -36.01% (alpha of 18.69%). Between 04/19/2010 to 06/28/2010: Price changed from $7.97 to $8.77, a price return of 10.04% (alpha of 20.3%). Between 07/18/2011 and 09/18/2011: Price changed from $9.49 to $9.51, a price return of 0.21% (alpha of 7.06%). [Average Alpha During Downturns: 15.35%] Levered free cash flow at $53.57M vs. enterprise value at $506.18M (implies a LFCF/EV ratio at 10.58%).

4. Arch Capital Group Ltd. (NASDAQ:ACGL): Provides insurance and reinsurance products worldwide. Between 10/01/2007 and 03/02/2009: Price changed from $25.16 to $17.52, a price return of -30.37% (alpha of 24.33%). Between 04/19/2010 to 06/28/2010: Price changed from $25.29 to $25.47, a price return of 0.71% (alpha of 10.98%). Between 07/18/2011 and 09/18/2011: Price changed from $32.32 to $33.65, a price return of 4.12% (alpha of 10.97%). [Average Alpha During Downturns: 15.43%] Levered free cash flow at $527.50M vs. enterprise value at $4.11B (implies a LFCF/EV ratio at 12.83%).

5. MKS Instruments Inc. (NASDAQ:MKSI):
Provides instruments, subsystems, and process control solutions that measure, control, power, monitor, and analyze parameters of manufacturing processes worldwide. Between 10/01/2007 and 03/02/2009: Price changed from $19.35 to $11.75, a price return of -39.28% (alpha of 15.42%). Between 04/19/2010 to 06/28/2010: Price changed from $20.7 to $20.26, a price return of -2.13% (alpha of 8.14%). Between 07/18/2011 and 09/18/2011: Price changed from $24.86 to $24.65, a price return of -0.84% (alpha of 6.01%). [Average Alpha During Downturns: 9.86%] Levered free cash flow at $128.07M vs. enterprise value at $643.26M (implies a LFCF/EV ratio at 19.91%).

6. American Financial Group Inc. (NYSE:AFG): Engages in property and casualty insurance business in the United States. Between 10/01/2007 and 03/02/2009: Price changed from $26.83 to $13.93, a price return of -48.08% (alpha of 6.62%). Between 04/19/2010 to 06/28/2010: Price changed from $28.67 to $27.79, a price return of -3.07% (alpha of 7.2%). Between 07/18/2011 and 09/18/2011: Price changed from $33.8 to $32.99, a price return of -2.4% (alpha of 4.45%). [Average Alpha During Downturns: 6.09%] Levered free cash flow at $481.50M vs. enterprise value at $2.02B (implies a LFCF/EV ratio at 23.84%).

7. Synopsys Inc. (NASDAQ:SNPS): Provides technology solutions used to develop electronics and electronic systems worldwide. Between 10/01/2007 and 03/02/2009: Price changed from $27.47 to $17.94, a price return of -34.69% (alpha of 20.01%). Between 04/19/2010 to 06/28/2010: Price changed from $23.03 to $21.96, a price return of -4.65% (alpha of 5.62%). Between 07/18/2011 and 09/18/2011: Price changed from $24.15 to $25.99, a price return of 7.62% (alpha of 14.47%). [Average Alpha During Downturns: 13.37%] Levered free cash flow at $294.70M vs. enterprise value at $2.47B (implies a LFCF/EV ratio at 11.93%).

8. Lockheed Martin Corporation (NYSE:LMT): Engages in the research, design, development, manufacture, integration, operation, and sustainment of advanced technology systems and products in the areas of defense, space, intelligence, homeland security, and government information technology in the United States and internationally. Between 10/01/2007 and 03/02/2009: Price changed from $96.54 to $54.93, a price return of -43.1% (alpha of 11.6%). Between 04/19/2010 to 06/28/2010: Price changed from $79.54 to $73.87, a price return of -7.13% (alpha of 3.14%). Between 07/18/2011 and 09/18/2011: Price changed from $76.66 to $76.03, a price return of -0.82% (alpha of 6.03%). [Average Alpha During Downturns: 6.92%] Levered free cash flow at $2.58B vs. enterprise value at $25.71B (implies a LFCF/EV ratio at 10.04%).

9. PS Business Parks Inc. (NYSE:PSB):
PS Business Parks, Inc., a real estate investment trust (REIT), together with its subsidiaries, engages in the acquisition, development, ownership, and operation of commercial properties primarily multi-tenant flex, office, and industrial space. Between 10/01/2007 and 03/02/2009: Price changed from $50.35 to $29.07, a price return of -42.26% (alpha of 12.44%). Between 04/19/2010 to 06/28/2010: Price changed from $54.97 to $55.33, a price return of 0.65% (alpha of 10.92%). Between 07/18/2011 and 09/18/2011: Price changed from $56.39 to $53.45, a price return of -5.21% (alpha of 1.64%). [Average Alpha During Downturns: 8.33%] Levered free cash flow at $142.01M vs. enterprise value at $1.40B (implies a LFCF/EV ratio at 10.14%).

10. CVD Equipment Corp. (NASDAQ:CVV): Designs, develops, and manufactures equipment and process solutions used to develop and manufacture advanced solar, nano electronic components, materials, and coatings for research and industrial applications in the United States and internationally. Between 10/01/2007 and 03/02/2009: Price changed from $4.8 to $2.51, a price return of -47.71% (alpha of 6.99%). Between 04/19/2010 to 06/28/2010: Price changed from $3.66 to $3.35, a price return of -8.47% (alpha of 1.8%). Between 07/18/2011 and 09/18/2011: Price changed from $16.26 to $15.44, a price return of -5.04% (alpha of 1.81%). [Average Alpha During Downturns: 3.53%] Levered free cash flow at $7.52M vs. enterprise value at $60.45M (implies a LFCF/EV ratio at 12.44%).

11. Kansas City Life Insurance Company (NASDAQ:KCLI): Operates as a financial services company that primarily focuses on the sale and administration of life and annuity insurance products in the United States. Between 10/01/2007 and 03/02/2009: Price changed from $40.58 to $18.65, a price return of -54.04% (alpha of 0.66%). Between 04/19/2010 to 06/28/2010: Price changed from $32.79 to $30.88, a price return of -5.82% (alpha of 4.44%). Between 07/18/2011 and 09/18/2011: Price changed from $29.87 to $30.98, a price return of 3.72% (alpha of 10.57%). [Average Alpha During Downturns: 5.22%] Levered free cash flow at $47.92M vs. enterprise value at $311.00M (implies a LFCF/EV ratio at 15.41%).

*Data sourced from Yahoo Finance.

Source: The Most Undervalued Recession-Proof Stocks