Do you look for undervalued opportunities in the market? If so, here's a small list you might find interesting. We began by screening the financials sector for high-growth stocks, with 5-year projected EPS growth above 15%.
We then screened for 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 should be trading higher? Use this list as a starting point for your own analysis.
List sorted by LFCF/EV.
1. Och-Ziff Capital Management Group LLC (NYSE:OZM): A publicly owned investment manager. Market cap at $2.9B, most recent closing price at $7.93. 5-year projected EPS growth at 21.48%. Levered free cash flow at $253.38M vs. enterprise value at $1.34B (implies a LFCF/EV ratio at 18.91%).
2. Duff & Phelps Corporation (NYSE:DUF): Provides independent financial advisory and investment banking services worldwide. Market cap at $604.07M, most recent closing price at $14.54. 5-year projected EPS growth at 17.50%. Levered free cash flow at $68.56M vs. enterprise value at $551.82M (implies a LFCF/EV ratio at 12.42%).
3. LPL Investment Holdings Inc. (NASDAQ:LPLA): Provides technology, brokerage, and investment advisory services through business relationships with independent financial advisors, financial advisors employed by financial institutions, registered investment advisors, and financial institutions in the United States. Market cap at $3.03B, most recent closing price at $26.84. 5-year projected EPS growth at 15.75%. Levered free cash flow at $492.85M vs. enterprise value at $4.21B (implies a LFCF/EV ratio at 11.71%).
*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.