9 Undervalued Mid Cap Growth Stocks

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Includes: AA, AWCMF, CEO, CGG, GNW, KGC, LUV, OC, RCL
by: ZetaKap

Mid-cap stocks provide a unique investment opportunity. After all, mid caps by definition have room to grow to join the ranks of their larger cap peers. Today, we screened for mid caps that look undervalued from a price-multiple perspective. We think you'll find the list we came up with rather interesting.

The Price/Book Value Ratio is a great price-multiple valuation metric to find companies that could be potentially undervalued or overvalued. If a firm has a Price/Book Value Ratio of less than 1 it is stated to be trading below "break up" value. A lower P/BV Ratio can indicate a potentially mispriced company or indicate that something is fundamentally wrong with it.

The forward P/E is a price multiple valuation metric, which is similar to the current P/E ratio, except that it uses the forecasted earnings instead. While this number might not be as accurate because it uses "forecasted" numbers, it does offer the benefit of illustrating analysts' expectations of a firm. If the market believes that earnings will grow moving forward, then the forward P/E should be lower than the current P/E. Financial Leverage, also known as the Equity Multiplier, illustrates how a firm is financing its assets. The lower the number the more a firm is financing its assets internally through stockholder equity. The higher this metric is the more the firm is relying on debt to finance its assets.

EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. The 1-Year Expected EPS Growth Rate is an annual growth estimate, where the growth projections are made by analysts, the company or other credible sources.

We first looked for mid cap stocks. Next, we then screened for businesses that are undervalued (P/BV<1)(forward P/E<10). We next screened for businesses with projected high growth, measured by 1-year projected EPS growth above 25%. We did not screen out any sectors.

Do you think these mid-cap stocks have what it takes to grow? Use our screened list as a starting point for your own analysis.

1) Nexen Inc. (NXY)

Sector: Basic Materials
Industry: Independent Oil & Gas
Market Cap: $8.46B
Beta: 1.48
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Nexen Inc. has a Price/Book Value Ratio of 1.00, a Forward Price/Earnings Ratio of 6.32, and a 1-Year Projected Earnings Per Share Growth Rate of 39.80%. The short interest was 0.88% as of 06/08/2012. Nexen Inc. (Nexen) is an independent, Canadian-based, global energy company. Nexen operates in four segments: oil and gas, Syncrude, energy marketing and chemicals.

2) Royal Caribbean Cruises Ltd. (NYSE:RCL)

Sector: Services
Industry: Resorts & Casinos
Market Cap: $5.28B
Beta: 2.97
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Royal Caribbean Cruises Ltd. has a Price/Book Value Ratio of 0.61, a Forward Price/Earnings Ratio of 9.08, and a 1-Year Projected Earnings Per Share Growth Rate of 32.84%. The short interest was 4.59% as of 06/08/2012. Royal Caribbean Cruises Ltd. operates in the cruise vacation industry worldwide. It owns five cruise brands, which comprise Royal Caribbean International, Celebrity Cruises, Pullmantur, Azamara Club Cruises, and CDF Croisires de France. The Royal Caribbean International brand provides various itineraries and cruise lengths with options for onboard dining, entertainment, and other onboard activities primarily for the contemporary segment.

3) Kinross Gold Corporation (NYSE:KGC)

Sector: Basic Materials
Industry: Gold
Market Cap: $9.43B
Beta: 0.44
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Kinross Gold Corporation has a Price/Book Value Ratio of 0.75, a Forward Price/Earnings Ratio of 7.33, and a 1-Year Projected Earnings Per Share Growth Rate of 31.40%. The short interest was 0.33% as of 06/08/2012. Kinross Gold Corporation, together with its subsidiaries, engages in mining and processing gold ores. It is also involved in the exploration and acquisition of gold bearing properties. The company's gold production and exploration activities are carried out principally in Canada, the United States, the Russian Federation, Brazil, Ecuador, Chile, Ghana, and Mauritania.

4) Alcoa, Inc. (NYSE:AA)

Sector: Basic Materials
Industry: Aluminum
Market Cap: $9.09B
Beta: 2.06
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Alcoa, Inc. has a Price/Book Value Ratio of 0.64, a Forward Price/Earnings Ratio of 8.97, and a 1-Year Projected Earnings Per Share Growth Rate of 69.64%. The short interest was 6.94% as of 06/08/2012. Alcoa, Inc. engages in the production and management of primary aluminum, fabricated aluminum, and alumina. The company operates in four segments: Alumina, Primary Metals, Flat-Rolled Products, and Engineered Products and Solutions. The Alumina segment engages in mining of bauxite, which is then refined into alumina.

5) Genworth Financial Inc. (NYSE:GNW)

Sector: Financial
Industry: Life Insurance
Market Cap: $2.64B
Beta: 3.08
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Genworth Financial Inc. has a Price/Book Value Ratio of 0.18, a Forward Price/Earnings Ratio of 3.68, and a 1-Year Projected Earnings Per Share Growth Rate of 82.50%. The short interest was 2.08% as of 06/08/2012. Genworth Financial, Inc., a financial security company, provides insurance, wealth management, investment, and financial solutions in the United States and internationally. The company offers various insurance and fixed annuity products, including life and long-term care insurance products; payment protection insurance products for consumers primarily to meet specified payment obligations; and wealth management products, such as managed account programs with advisor support and financial planning services. It also provides mortgage insurance products and related services to insure prime-based, individually underwritten residential mortgage loans or flow mortgage insurance; and mortgage insurance on a structured or bulk basis, as well as offers services, analytical tools, and technology that enable lenders to operate and manage risk.

6) Owens Corning (NYSE:OC)

Sector: Industrial Goods
Industry: General Building Materials
Market Cap: $3.59B
Beta: 2.20
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Owens Corning has a Price/Book Value Ratio of 0.97, a Forward Price/Earnings Ratio of 9.79, and a 1-Year Projected Earnings Per Share Growth Rate of 41.31%. The short interest was 6.64% as of 06/08/2012. Owens Corning engages in the provision of composite and building materials systems worldwide. It operates in two segments, Composites and Building Materials. The Composites segment manufactures, fabricates, and sells glass reinforcements in the form of fiber; and manufactures and sells glass fiber products in the form of fabrics, mat, veil, and other specialized products.

7) Compagnie G (CGV)

Sector: Basic Materials
Industry: Oil & Gas Equipment & Services
Market Cap: $3.59B
Beta: 2.31
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Compagnie G has a Price/Book Value Ratio of 0.93, a Forward Price/Earnings Ratio of 7.97, and a 1-Year Projected Earnings Per Share Growth Rate of 101.36%. The short interest was 0.12% as of 06/08/2012. Compagnie Gnrale de Gophysique-Veritas S.A., together with its subsidiaries, provides geophysical services and equipment to the oil and gas exploration and production industries in France and internationally.

8) Alumina Ltd. (AWC)

Sector: Basic Materials
Industry: Aluminum
Market Cap: $2.30B
Beta: 2.04
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Alumina Ltd. has a Price/Book Value Ratio of 0.81, a Forward Price/Earnings Ratio of 5.31, and a 1-Year Projected Earnings Per Share Growth Rate of 3450.00%. The short interest was 0.13% as of 06/08/2012. Alumina Limited, through its 40% equity interest in Alcoa World Alumina and Chemicals, engages in the bauxite mining, alumina refining, and aluminum smelting businesses. It has interests in eight alumina refineries and eight bauxite mines, as well as operates two aluminum smelters in Victoria, Australia. The company also owns interests in a network of mines, refineries, and smelters in the United States, Guinea, Suriname, Jamaica, Brazil, and Spain. In addition, it owns and operates a shipping operation that transports alumina, aluminum, and raw materials worldwide.

9) Southwest Airlines Co. (NYSE:LUV)

Sector: Services
Industry: Regional Airlines
Market Cap: $6.96B
Beta: 1.07
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Southwest Airlines Co. has a Price/Book Value Ratio of 0.99, a Forward Price/Earnings Ratio of 8.63, and a 1-Year Projected Earnings Per Share Growth Rate of 43.84%. The short interest was 2.82% as of 06/08/2012. Southwest Airlines Co. engages in the operation of a passenger airline that provides scheduled air transportation in the United States. As of December 31, 2011, the company operated 698 aircraft, including 610 Boeing 737 aircraft and 88 Boeing 717 aircrafts, and offered services to 72 cities in 37 states. It also sells frequent flyer points and/or credits and related services to business partners participating in the Rapid Rewards frequent flyer program, including car rental agencies, hotels, restaurants, and retail locations.

*Company profiles were sourced from Finviz. Financial data was sourced from Finviz and Yahoo Finance.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.