Do you like to invest in stock momentum trends? For a look at which stocks have been outperforming recently, we ran a screen.
We began by screening for large-cap stocks, with market caps above $10 billion, for those outperforming over the last quarter, with greater than 20% return. We then screened for those that appear undervalued relative to the ratio levered free cash flow/enterprise value.
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. Companies with high ratios of levered free cash flow/enterprise value may be undervalued by the market.
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. CF Industries Holdings, Inc. (NYSE:CF): Manufactures and distributes nitrogen and phosphate fertilizer products, serving agricultural and industrial customers worldwide. Market cap at $12.33B.Performance over the last quarter at 34.95%. Levered free cash flow at $1.84B vs. enterprise value at $12.58B (implies a LFCF/EV ratio at 14.63%).
2. Comcast Corporation (NASDAQ:CMCSA): Provides entertainment, information, and communications products and services in the United States and internationally. Market cap at $79.12B.Performance over the last quarter at 29.61%. Levered free cash flow at $15.12B vs. enterprise value at $117.22B (implies a LFCF/EV ratio at 12.9%).
3. General Electric Co. (NYSE:GE): Operates as a technology, service, and finance company worldwide. Market cap at $200.73B.Performance over the last quarter at 21.45%. Levered free cash flow at $63.68B vs. enterprise value at $570.51B (implies a LFCF/EV ratio at 11.16%).
4. Ingersoll-Rand Plc (NYSE:IR): Engages in the design, manufacture, sale, and service of a portfolio of industrial and commercial products in the United States and internationally. Market cap at $11.81B.Performance over the last quarter at 20.30%. Levered free cash flow at $2.07B vs. enterprise value at $14.34B (implies a LFCF/EV ratio at 14.44%).
*LFCF/EV data sourced from Yahoo Finance, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.