Do you like searching for undervalued stocks? How can you tell if a stock is trading too low? For ideas on how to search for undervalued names, we ran a screen you might find interesting.
We began with stocks in the tech sector with market caps above $100 million. Then we searched these tech names to find those with high-growth, screening for those with 5-year projected EPS growth above 20%.
Finally, to find those that could be undervalued, we screened for the stocks trading at the steepest discounts to even their lowest, most pessimistic analyst target prices. Because target prices are known to suffer from upward bias, we use the lowest target price among analysts. To only include sufficiently covered companies, we only present companies with five or more analyst ratings.
Interactive Chart: Press Play to compare changes in market cap over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.
Do you think these names are being undervalued by the market? Use this list as a starting point for your own analysis.
List sorted by discount from the lowest analyst target price. The lower the stock's price relative to target price, the more likely the stock is currently undervalued.
1. RealPage, Inc. (RP): Engages in the development of multi-family property management software. Market cap at $1.32B.Price at $18.16. 5-year projected EPS growth at 22.50%. Of the five analysts that have set a target price on the stock, the lowest price target stands at $25.00. This implies a current upside of 31.44% from current levels around $19.02.
2. 21Vianet Group Inc. (VNET): Provides carrier-neutral Internet data center services in China. Market cap at $645.02M.Price at $11.31. Five-year projected EPS growth at 31.50%. Of the six analysts that have set a target price on the stock, the lowest price target stands at $15.00. This implies a current upside of 30.43% from current levels around $11.50.
3. LogMeIn, Inc. (LOGM): Provides on-demand, remote-connectivity solutions to small and medium-sized businesses, information technology service providers and consumers in the United States and internationally. Market cap at $855.04M. Price at $34.28. Five-year projected EPS growth at 23.47%. Of the seven analysts that have set a target price on the stock, the lowest price target stands at $45.00. This implies a current upside of 26.72% from current levels around $35.51.
4. Oplink Communications Inc. (OPLK): Designs, manufactures and sells optical networking components and subsystems worldwide. Market cap at $328.11M.Price at $17.01. Five-year projected EPS growth at 26.00%. Of the five analysts that have set a target price on the stock, the lowest price target stands at $22.00. This implies a current upside of 26.36% from current levels around $17.41.
*Target price data sourced from Thomson/First Call (via 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.