It is getting harder to find undervalued stocks in the market. One stock, Oplink Communications (NASDAQ:OPLK), recently caught my eye recently because it has a huge cash balance, low valuations and has underperformed the S&P by around 15% over the last six months. It looks like a rare value in this market.
7 reasons OPLK is cheap at under $16 a share:
- It has over $9 a share in net cash on its balance sheet.
- The median price target for the five analysts that cover the stock is $22 a share.
- Insiders have a significant stake in the company and have not sold a share in over a year.
- The stock has good technical support in this price range (See Chart).
- This equity is selling at just 10% over book value and under 7 times forward earnings if you back out net cash.
- The company is selling near the bottom of its five year valuation based on P/CF, P/S and P/B.
- Given the company's small market cap, high cash balance and niche products/services; it could be a logical and easy acquisition for a larger player. It was trading as high as $23 within the last year.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in OPLK over the next 72 hours.