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Healthcare is often considered a growth sector that marches to the beat of its own drum. For ideas on how to dig deeper into the healthcare sector, we ran a screen.

We screened the sector for stocks that appear highly undervalued to earnings growth, with PEG below 1, and free cash flow, with P/FCF below 15. We then screened for those with the most significant net institutional purchases over the current quarter.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the 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 stocks should be trading higher? Use this list as a starting point for your own analysis.

1. CIGNA Corporation (NYSE:CI): Operates as a health service organization. PEG at 0.79. P/FCF at 7.43. Net institutional purchases in the current quarter at 12.9M shares, which represents about 4.79% of the company's float of 269.43M shares.

2. DepoMed Inc. (NASDAQ:DEPO): Develops and commercializes pharmaceutical products based on its proprietary oral drug delivery technologies in the United States. PEG at 0.14. P/FCF at 4.79. Net institutional purchases in the current quarter at 3.1M shares, which represents about 6.01% of the company's float of 51.57M shares.

3. PDL BioPharma, Inc. (NASDAQ:PDLI): Engages in the management of antibody humanization patents and royalty assets, which consist of Queen et al. PEG at 0.39. P/FCF at 10.38. Net institutional purchases in the current quarter at 9.8M shares, which represents about 8.15% of the company's float of 120.22M shares.

4. Sun Healthcare Group Inc. (NASDAQ:SUNH): Provides health care services primarily for senior population in the United States. PEG at 0.49. P/FCF at 4.99. Net institutional purchases in the current quarter at 890.8K shares, which represents about 4.42% of the company's float of 20.16M shares.

*Institutional data sourced from Fidelity, all other data sourced from Finviz.

Source: Hedge Funds Love These 4 Highly Undervalued Healthcare Stocks