Seeking Alpha
Long/short equity, deep value, value
Profile| Send Message|
( followers)

The Price/Cash Flow ratio is a valuation metric that focuses on a company’s future financial health. The ratio is constructed by dividing the stock price by the company’s cash flow per share. One of the key appeals to this metric is that cash flow removes non-cash factors such as depreciation and is more difficult to manipulate than earnings. This helps investors get a clearer picture of how much money the company is actually making.

We specifically screened for those that appeared to be undervalued according to their P/CFO ratios (X<10). From this narrowed pool we then looked for companies that have recently signaled bullish trends by outperforming the S&P 500 in the last week and over the last three months.

The companies are listed from highest to lowest according to their 1-week performance:

1. El Paso Corporation. (EP)

Sector

Energy

Industry

Oil & Gas Integrated

Market Cap

$18,833M

Beta

1.22

The company primarily operates in regulated exploration, natural gas transmission, and production. The company has a P/CFO ratio of 9.82. EP has increased by 27.88% over the last week and increased by 21.51% over the last 3 months. The short interest was 2.70% as of 09/30/2011. The company has recently become a buyout target, with a bid having been submitted.

2. Spreadtrum Communications, Inc. (NASDAQ:SPRD)

Sector

Technology

Industry

Semiconductors

Market Cap

$1,021M

Beta

1.25

The company designs and sells baseband processor solutions for the wireless market. The company has a P/CFO ratio of 6.90. SPRD has increased by 9.81% over the last week and increased by 37.15% over the last 3 months. The short interest was N/A as of 09/30/2011.

3. Giant Interactive Group, Inc. (NYSE:GA)

Sector

Industrials

Industry

Business Services

Market Cap

$876M

Beta

0.61

The company develops and operates online games in China. The company has a P/CFO ratio of 5.50. GA has increased by 9.48% over the last week and increased by 31.23% over the last 3 months. The short interest was N/A as of 09/30/2011.

4. ASML Holding NV. (NASDAQ:ASML)

Sector

Technology

Industry

Semiconductor Equipment & Materials

Market Cap

$17,307M

Beta

1.49

The company offers advanced technology systems for the semiconductor space with integrated portfolio of lithography systems. The company has a P/CFO ratio of 5.58. ASML has increased by 7.19% over the last week and increased by 15.50% over the last 3 months.

5. Maxim Integrated Products. (NASDAQ:MXIM)

Sector

Technology

Industry

Semiconductors

Market Cap

$7,481M

Beta

1.07

The company designs and markets linear and mixed-signal integrated circuits. The company has a P/CFO ratio of 8.99. MXIM has increased by 4.63% over the last week and increased by 9.62 % over the last 3 months. The short interest was 6.20% as of 09/30/2011.

6. Pharmerica Corporation. (NYSE:PMC)

Sector

Consumer Defensive

Industry

Pharmaceutical Retailers

Market Cap

$428M

Beta

0.70

The company has a P/CFO ratio of 8.09. PMC has increased by 3.48% over the last week and increased by 8.73% over the last 3 months. The short interest was 7.40% as of 09/30/2011.

7. Tesoro Corporation. (NYSE:TSO)

Sector

Energy

Industry

Oil & Gas Refining & Marketing

Market Cap

$3,627M

Beta

1.22

The company is an independent petroleum refiner in the US. The company has a P/CFO ratio of 6.72. TSO has increased by 3.40% over the last week and increased by 7.37% over the last 3 months. The short interest was N/A as of 09/30/2011.

8. PAETEC Holding Corp. (NASDAQ:PAET)

Sector

Communication Services

Industry

Telecom Services

Market Cap

$808M

Beta

1.76

The company is an integrated communications provider that offers broadband communication solutions. The company has a P/CFO ratio of 4.15. PAET has increased by 3.16% over the last week and increased by 21.71% over the last 3 months. The short interest was N/A as of 09/30/2011.

9. Crosstex Energy, Inc. (XTXI)

Sector

Energy

Industry

Oil & Gas Midstream

Market Cap

$652M

Beta

2.11

The company engages in the gathering, transmission, and marketing of natural gas and NGL’s. The company has a P/CFO ratio of 4.89. XTXI has increased by 2.60% over the last week and increased by 8.08% over the last 3 months. The short interest was 8.10% as of 09/30/2011.

10. Garmin, Ltd. (NASDAQ:GRMN)

Sector

Technology

Industry

Scientific & Technical Instruments

Market Cap

$7,125M

Beta

1.49

The company designs and sells GPS-enabled navigation and communication technology for a variety of transportation vehicles. The company has a P/CFO ratio of 8.35. GRMN has increased by 2.55% over the last week and increased by 7.48% over the last 3 months. The short interest was 21.10% as of 09/30/2011. Given the high short interest rate, this could be a short favorite or potentially a great short squeeze.

We hope this list helps as investors do their own due diligence on companies that appear undervalued according to their P/CFO ratio. These were the top ten companies listed at the time this article was written.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.