While the world now continues to secretly worry about Europe and whether real growth for the global economy can be sustained, some investors are simply tuning out the chatter. Instead, some stocks are just roaring higher after being left for dead. In our view, the names we found today make great potential opportunities to review because of their cheap valuations, sound profitability, and recent bullish momentum.
The Price/Cash Flow ratio is a price-multiple valuation metric that also measures a firm’s future financial health. An advantage of using cash flow is that it removes non-cash factors, which helps provide a clearer picture of how much money the firm is taking in from a valuation standpoint.
Price/Cash Flow Ratio=Current Stock Price/Cash Flow Per Share
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. EPS growth rates help investors identify stocks that are increasing or decreasing in profitability. This profitability metric is generally a key driver in the price of the stock as it directly correlates to the profitability of the firm as a whole.
We first looked for companies trading at low price-multiple valuations (P/CFO<10). From this narrowed list we then looked for companies that have strong profitability (1-year fiscal EPS Growth Rate>10%) and gained bullish momentum (1-Week Return>S&P 500). We did not screen out any sectors or market caps.
The list is ranked from highest to lowest by the P/CFO ratio:
1. Moog, Inc. (MOG.A)
Sector | Industrials |
Industry | Aerospace & Defense |
Market Cap | $1,825M |
Beta | 1.28 |
Moog designs and builds high performance, precision motion, and fluid controls and systems for a variety of different industries. The company has a P/CFO ratio of 9.96 & 1-year fiscal EPS rate of 19.19%. Moog has gained 7.05% over the last week. The short interest was N/A as of 10/14/2011.
2. Southern Union Co. (SUG)
Sector | Energy |
Industry | Oil & Gas Midstream |
Market Cap | $5,280M |
Beta | 0.81 |
Southern Union owns and operates assets in both the regulated and unregulated natural gas markets. The company has a P/CFO ratio of 9.96 & 1-year fiscal EPS rate of 36.50%. Southern Union has gained 2.02% over the last week. The short interest was 2.00% as of 10/14/2011.
3. The Finish Line Inc. (FINL)
Sector | Consumer Cyclical |
Industry | Footwear & Accessories |
Market Cap | $1,067M |
Beta | 1.58 |
The Finish Line is a mall-based specialty retailer of athletic and lifestyle footwear. The company has a P/CFO ratio of 9.93 & 1-year fiscal EPS rate of 36.96%. The Finish Line has gained 1.13% over the last week. The short interest was 10.20% as of 10/14/2011.
4. Spectra Energy Corp. (SE)
Sector | Energy |
Industry | Oil & Gas Midstream |
Market Cap | $18,969M |
Beta | 0.98 |
Spectra owns and operates complementary natural gas-related energy assets in the North America. The company has a P/CFO ratio of 9.92 & 1-year fiscal EPS rate of 22.14%. Spectra has gained 3.22% over the last week. The short interest was 2.50% as of 10/14/2011.
5. Gold Fields Ltd. (GFI)
Sector | Basic Materials |
Industry | Gold |
Market Cap | $12,840M |
Beta | 0.72 |
Gold Fields explores for, produces, and holds gold from all over the world. The company has a P/CFO ratio of 9.83 & 1-year fiscal EPS rate of 129.17%. Gold Fields has gained 13.55% over the last week. The short interest was N/A as of 10/14/2011.
6. The Walt Disney Co. (DIS)
Sector | Consumer Cyclical |
Industry | Media - Diversified |
Market Cap | $67,206M |
Beta | 1.30 |
Disney operates in a variety of industries ranging from theme parks, to the movie industry, broadcasting, and more. The company has a P/CFO ratio of 9.83 & 1-year fiscal EPS rate of 15.34%. Disney has gained 2.99% over the last week. The short interest was 2.40% as of 10/14/2011.
7. Newmont Mining Corporation. (NEM)
Sector | Basic Materials |
Industry | Gold |
Market Cap | $33,438M |
Beta | 0.36 |
Newmont owns and operates gold mines around the world. The company has a P/CFO ratio of 9.82 & 1-year fiscal EPS rate of 72.01%. Newmont has gained 9.36% over the last week. The short interest was N/A as of 10/14/2011.
8. Arrow Electronics Inc. (ARW)
Sector | Technology |
Industry | Electronics Distribution |
Market Cap | $4,097M |
Beta | 1.81 |
Arrow offers products and solutions who work with electronic components and computer products. The company has a P/CFO ratio of 9.81 & 1-year fiscal EPS rate of 289.32%. Arrow has gained 12.55% over the last week. The short interest was 2.50% as of 10/14/2011.
9. The Dow Chemical Co. (DOW)
Sector | Basic Materials |
Industry | Chemicals |
Market Cap | $34,551M |
Beta | 2.68 |
Dow Chemical sells chemical, plastic and agricultural products along services around the world. The company has a P/CFO ratio of 9.80 & 1-year fiscal EPS rate of 681.82%. Dow Chemical has gained 7.38% over the last week. The short interest was 2.40% as of 10/14/2011.
10. KLA-Tencor Corporation. (KLAC)
Sector | Technology |
Industry | Semiconductor Equipment & Materials |
Market Cap | $7,907M |
Beta | 1.79 |
KLA-Tencor supplies process control and yield management solutions for the semiconductor space along with other industries. The company has a P/CFO ratio of 9.79 & 1-year fiscal EPS rate of 278.86%. KLA-Tencor has gained 9.35% over the last week. The short interest was 7.50% as of 10/14/2011.
We hope this list helps as investors do their own due diligence and research on undervalued stocks with strong momentum and profitability.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
