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Do you prefer stocks that offer both value and the potential for growth? We ran a screen with this idea in mind.

We began by screening for dividend stocks - those paying dividend yields above 2% and sustainable payout ratios below 50%. We then screened for those that appear undervalued relative to earnings growth, with PEG below 1.

We then screened for those with bullish sentiment from institutional investors, with significant net institutional purchases over the last quarter representing at least 5% of share float. This indicates that institutional investors such as hedge fund managers and mutual fund managers expect these names to outperform.

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Do you think hedge funds are calling it right on these names? Use this list as a starting point for your own analysis.

List sorted by net institutional purchases over the last quarter as a percent of share float.

1. DDI Corp. (NASDAQ:DDIC): Provides printed circuit board engineering and manufacturing services primarily in North America. Market cap at $266.2M, most recent closing price at $12.99. Dividend yield at 3.70%, payout ratio at 37.00%. PEG at 0.79. Net institutional purchases in the current quarter at 1.0M shares, which represents about 7.01% of the company's float of 14.26M shares.

2. Methanex Corp. (NASDAQ:MEOH): Engages in the production, marketing, and sale of methanol. Market cap at $2.57B, most recent closing price at $27.98. Dividend yield at 2.66%, payout ratio at 30.75%. PEG at 0.36. Net institutional purchases in the current quarter at 6.3M shares, which represents about 6.77% of the company's float of 93.00M shares.

3. PNM Resources, Inc. (NYSE:PNM): Operates in energy and energy-related businesses in the United States. Market cap at $1.42B, most recent closing price at $17.89. Dividend yield at 3.25%, payout ratio at 24.76%. PEG at 0.9. Net institutional purchases in the current quarter at 4.7M shares, which represents about 5.95% of the company's float of 78.95M shares.

4. Guess' Inc. (NYSE:GES): Engages in the design, marketing, distribution, and licensing of apparel and accessories for men, women, and children. Market cap at $2.21B, most recent closing price at $24.90. Dividend yield at 3.25%, payout ratio at 28.15%. PEG at 0.73. Net institutional purchases in the current quarter at 3.7M shares, which represents about 5.73% of the company's float of 64.53M shares.

5. Booz Allen Hamilton Inc. (NYSE:BAH): Provides professional services primarily to US government agencies in the defense, security, and civil sectors, as well as to corporations, institutions, and not-for-profit organizations. Market cap at $2.05B, most recent closing price at $15.46. Dividend yield at 2.33%, payout ratio at 5.56%. PEG at 0.76. Net institutional purchases in the current quarter at 1.5M shares, which represents about 5.57% of the company's float of 26.92M shares.

6. Aceto Corp. (NASDAQ:ACET): Engages in sourcing, quality assurance, regulatory support, marketing, and distributing chemically derived pharmaceuticals, biopharmaceuticals, specialty chemicals, and crop protection products. Market cap at $222.34M, most recent closing price at $8.30. Dividend yield at 2.41%, payout ratio at 35.60%. PEG at 0.67. Net institutional purchases in the current quarter at 1.4M shares, which represents about 5.54% of the company's float of 25.27M shares.

*Institutional data sourced from Fidelity, 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.

Source: 6 Undervalued Dividend Stocks Hedge Funds Are Buying Up