Interested in the high-growth prospects of the tech industry? With this idea in mind, we ran a screen on wireless stocks.
We began by screening for wireless communications stocks of the tech industry, and then screened for those stocks that appear undervalued relative to their cash flows, indicated by high ratios of levered free cash flow/enterprise value.
Levered free cash flow is the free cash flow after deducting interest payments on outstanding debt. Enterprise value is the sum of the firm's value from all ownership sources: market cap, outstanding debt, and preferred shares. When companies have ratios of levered free cash flow/enterprise value in excess of 10%, it may indicate that the company as a whole is being undervalued.
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 are being undervalued? Use this list as a starting point for your own analysis.
List sorted by LFCF/EV.
1. Portugal Telecom SGPS SA (PT): Provides telecommunications services in Portugal, Brazil, and Africa. Market cap at $3.83B, most recent closing price at $4.19. Levered free cash flow at $2.72B vs. enterprise value at $12.26B (implies a LFCF/EV ratio at 22.19%).
2. Partner Communications Company Ltd. (PTNR): Provides various telecommunications services in Israel. Market cap at $515.2M, most recent closing price at $3.36. Levered free cash flow at $238.60M vs. enterprise value at $1.60B (implies a LFCF/EV ratio at 14.91%).
3. SK Telecom Co. Ltd. (SKM): Provides wireless telecommunications services using code division multiple access (CDMA) and wide-band CDMA technologies. Market cap at $9.03B, most recent closing price at $13.83. Levered free cash flow at $1.40B vs. enterprise value at $13.48B (implies a LFCF/EV ratio at 10.39%).
*LFCF/EV data sourced from 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.