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In the never-ending search for potentially undervalued stocks, one indicator is the ratio levered free cash flow/enterprise value. Companies with higher ratios appear more undervalued relative to their levered free cash flows.

Levered free cash flow is the free cash flow after deducting interest payments on outstanding debt. Enterprise value is the sum of the firm's value from all ownership sources: market cap, outstanding debt, and preferred shares. From this value we subtract cash holdings because, in the event of a takeover, that cash would be used towards the takeover price.

We compiled a universe of potential takeover/leveraged buyout (LBO) targets for those with relatively high ratios of levered free cash flow/enterprise value, possibly indicating that they are undervalued.

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.

Do you think these companies are attractively valued? Use this list as a starting point for your own analysis.

List sorted by LFCF/EV.

1. GameStop Corp. (NYSE:GME): Operates as a retailer of video game products and personal computer (PC) entertainment software. Market cap of $3.31B. Takeover/LBO idea sourced from Seeking Alpha. Levered free cash flow/enterprise value at 21.58% (levered free cash flow at $636.65M and enterprise value at $2.95B). Might be undervalued at current levels, with a PEG ratio at 0.93, and P/FCF ratio at 4.7. The stock is a short squeeze candidate, with a short float at 29.91% (equivalent to 11.72 days of average volume). The stock has gained 17.05% over the last year.

2. RadioShack Corp. (NYSE:RSH): Engages in the retail sale of consumer electronic goods and services through its RadioShack store chain and kiosk operations. Market cap of $1.01B. Takeover/LBO idea sourced from CNN Money. Levered free cash flow/enterprise value at 21.44% (levered free cash flow at $214.39M and enterprise value at $1.00B). Offers a good dividend, and appears to have good liquidity to back it up--dividend yield at 4.95%, current ratio at 2.82, and quick ratio at 1.59.

3. AMERIGROUP Corporation (AGP): Operates as a multi-state managed healthcare company. Market cap of $3.18B. Takeover/LBO idea sourced from iStockAnalyst. Levered free cash flow/enterprise value at 17.85% (levered free cash flow at $453.48M and enterprise value at $2.54B). The stock is a short squeeze candidate, with a short float at 10.16% (equivalent to 5.27 days of average volume). Exhibiting strong upside momentum--currently trading 13.45% above its SMA20, 17.38% above its SMA50, and 16.87% above its SMA200. The stock has had a couple of great days, gaining 10.16% over the last week.

4. SAIC, Inc. (SAI): Offers scientific, engineering, systems integration, and technical services to various branches of the U.S. military and U.S. government. Market cap of $4.42B. Takeover/LBO idea sourced from Seeking Alpha. Levered free cash flow/enterprise value at 17.53% (levered free cash flow at $818.75M and enterprise value at $4.67B). The stock has recently rebounded, and is currently trading 5.62% above its SMA20 and 6.39% above its SMA50. However, the stock still trades 10.63% below its SMA200. The stock has lost 19.05% over the last year.

5. IAC/InterActiveCorp. (NASDAQ:IACI): Engages in the Internet business in the United States and internationally. Market cap of $3.39B. Takeover/LBO idea sourced from Seeking Alpha. Levered free cash flow/enterprise value at 15.46% (levered free cash flow at $406.71M and enterprise value at $2.63B). The stock has gained 39.81% over the last year.

6. EarthLink Inc. (NASDAQ:ELNK): Provides communications services to individual and business customers in the United States. Market cap of $713.69M. Takeover/LBO idea sourced from The Motley Fool. Levered free cash flow/enterprise value at 13.23% (levered free cash flow at $145.49M and enterprise value at $1.10B). The stock has had a good month, gaining 10.95%.

7. CA Technologies (NASDAQ:CA): Designs, develops, markets, delivers, licenses, and supports information technology (NYSE:IT) management software products that operate on a range of hardware platforms and operating systems. Market cap of $10.33B. Takeover/LBO idea sourced from Seeking Alpha. Levered free cash flow/enterprise value at 13.04% (levered free cash flow at $1.21B and enterprise value at $9.28B). The stock has lost 13.83% over the last year.

8. Gannett Co., Inc. (NYSE:GCI): Operates as a media and marketing solutions company in the United States and internationally. Market cap of $3.41B. Takeover/LBO idea sourced from Wall St. Cheat. Levered free cash flow/enterprise value at 12.98% (levered free cash flow at $651.40M and enterprise value at $5.02B). This is a risky stock that is significantly more volatile than the overall market (beta = 2.46). The stock is a short squeeze candidate, with a short float at 9.09% (equivalent to 5.02 days of average volume).

9. Symantec Corporation (NASDAQ:SYMC): Provides security, storage, and systems management solutions to secure and manage information. Market cap of $11.73B. Takeover/LBO idea sourced from Seeking Alpha. Levered free cash flow/enterprise value at 12.91% (levered free cash flow at $1.46B and enterprise value at $11.31B). The stock has lost 6.69% over the last year.

10. Apollo Group Inc. (NASDAQ:APOL): Provides educational programs and services at the undergraduate, master's, and doctoral levels. Market cap of $7.43B. Takeover/LBO idea sourced from Wall St. Cheat. Levered free cash flow/enterprise value at 12.54% (levered free cash flow at $763.65M and enterprise value at $6.09B). The stock is a short squeeze candidate, with a short float at 8.75% (equivalent to 5.07 days of average volume). Exhibiting strong upside momentum--currently trading 8.17% above its SMA20, 15.71% above its SMA50, and 25.8% above its SMA200. The stock has had a couple of great days, gaining 7.13% over the last week.

*LFCF/EV data sourced from Yahoo! Finance, all other data sourced from Finviz.

Source: Top 10 Takeover/LBO Targets Undervalued By Free Cash Flows