10 Undervalued Stocks With Impressive Profitability That Are Gaining Bullish Momentum

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 |  Includes: ARW, DIS, DOW, FINL, GFI, KLAC, MOG.A, NEM, SE, SUG
by: Follow My Alpha

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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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.