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Do you consider yourself a value investor? For a closer look at some potentially undervalued names, we ran a screen.

We began by screening for stocks that appear undervalued relative to earnings growth, with PEG below 1, and undervalued relative to free cash flow, with P/FCF below 15.

We then screened for those with strong profitability compared to industry peers, with higher gross, operating, and pretax margins than their industry averages by at least 5% on each margin. This indicates that these companies are taking a greater percentage of their revenues as profits, and they also have stronger control over their cost structures.

For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.

Tool provided by Kapitall.

Do you think these stocks should be trading higher? Use this list as a starting point for your own analysis.

List sorted by difference between pretax margin and industry average.

1. Discover Financial Services (DFS): Operates as a credit card issuer and electronic payment services company primarily in the United States. Market cap at $16.76B, most recent closing price at $31.60. PEG at 0.77. P/FCF at 5.43. TTM gross margin at 50.94% vs. industry average at 34.55%. TTM operating margin at 49.89% vs. industry average at 31.74%. TTM pretax margin at 44.05% vs. industry average at 26.02%.

2. Focus Media Holding Ltd. (FMCN): Operates out-of-home advertising network using audiovisual digital displays in China. Market cap at $2.72B, most recent closing price at $21.0. PEG at 0.77. P/FCF at 11.25. TTM gross margin at 69.3% vs. industry average at 41.25%. TTM operating margin at 30.25% vs. industry average at 19.42%. TTM pretax margin at 28.7% vs. industry average at 14.62%.

3. Yongye International, Inc. (YONG): Engages in the research, development, manufacture, and sale of fulvic acid based liquid and powder nutrient compounds for plants and animals, which are used in the agriculture industry in the People's Republic of China. Market cap at $147.58M, most recent closing price at $2.92. PEG at 0.17. P/FCF at 7.04. TTM gross margin at 59.63% vs. industry average at 37.36%. TTM operating margin at 27.16% vs. industry average at 16.98%. TTM pretax margin at 29.06% vs. industry average at 15.8%.

4. Bridgepoint Education, Inc. (BPI): Provides postsecondary education services. Market cap at $999.13M, most recent closing price at $19.06. PEG at 0.39. P/FCF at 6.98. TTM gross margin at 73% vs. industry average at 51.73%. TTM operating margin at 26.28% vs. industry average at 18.96%. TTM pretax margin at 25.44% vs. industry average at 15.9%.

5. Weight Watchers International, Inc. (WTW): Provides weight management services worldwide. Market cap at $3.12B, most recent closing price at $56.13. PEG at 0.98. P/FCF at 14.32. TTM gross margin at 59.88% vs. industry average at 51.73%. TTM operating margin at 28.22% vs. industry average at 18.96%. TTM pretax margin at 24.95% vs. industry average at 15.9%.

6. WABCO Holdings Inc. (WBC): Develops, manufactures, and sells braking, stability, suspension, and transmission control systems primarily for commercial vehicles. Market cap at $3.34B, most recent closing price at $51.84. PEG at 0.67. P/FCF at 13.6. TTM gross margin at 31.94% vs. industry average at 20.5%. TTM operating margin at 13.66% vs. industry average at 8.22%. TTM pretax margin at 13.82% vs. industry average at 7.29%.

7. JPMorgan Chase & Co. (JPM): Provides various financial services worldwide. Market cap at $125.89B, most recent closing price at $33.07. PEG at 0.99. P/FCF at 1.24. TTM gross margin at 81.73% vs. industry average at 61.34%. TTM operating margin at 47.11% vs. industry average at 38.28%. TTM pretax margin at 23.78% vs. industry average at 18.28%.

*Profitability data sourced from Fidelity, all other data sourced from Finviz.

Source: 7 Undervalued Stocks With Strong Profitability