For this list we looked for U.S.-based stocks with market cap above $300M and that reached new 52-week high during recent trading sessions. Additionally, all of these names are underperforming their industry when compared to the following valuation metrics:
- Trailing 12-month price to earnings ratio (TTM P/E)
- Price to earnings to growth ratio (PEG)
- Price to cash flow ratio
We last wrote about this screen on May 3. On that day, the screen produced six companies. Since then, four of those have outperformed the S&P 500 index (a success rate of 66.7%). The screen averaged a return of 0.7% vs. an index return of -4.5%. Click here to access a full breakdown of the screen's past performance.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.
1. Holly Corporation (HOC): Oil & Gas Refining & Marketing Industry. Market cap of $3.55B. TTM P/E at 16.45 vs. industry average 21.74. PEG at 1.5 vs. industry average 1.52. Price/Cash flow at 10.5 vs. industry average 25.13. The stock has had a good month, gaining 12.48%.
2. L-3 Communications Holdings Inc. (NYSE:LLL): Aerospace/Defense Products & Services Industry. Market cap of $8.74B. TTM P/E at 10 vs. industry average 17.44. PEG at 1.31 vs. industry average 1.59. Price/Cash flow at 7.85 vs. industry average 11.67. The stock has gained 6.92% over the last year.
3. Northrop Grumman Corporation (NYSE:NOC): Conglomerates Industry. Market cap of $19.48B. TTM P/E at 9.62 vs. industry average 17.62. PEG at 0.87 vs. industry average 1.59. Price/Cash flow at 7.17 vs. industry average 11.78. Offers a good dividend, and appears to have good liquidity to back it up--dividend yield at 3.01%, current ratio at 1.47, and quick ratio at 1.33. The stock is a short squeeze candidate, with a short float at 8.95% (equivalent to 12.36 days of average volume). The stock has gained 25.59% over the last year.
4. GT Solar International, Inc. (SOLR): Semiconductor Industry. Market cap of $1.75B. TTM P/E at 10.95 vs. industry average 17.28. PEG at 0.77 vs. industry average 1.06. Price/Cash flow at 10.38 vs. industry average 11.62. Might be undervalued at current levels, with a PEG ratio at 0.78, and P/FCF ratio at 7.94.The stock has had a good month, gaining 12.91%.
5. Unitedhealth Group, Inc. (NYSE:UNH): Health Care Plans Industry. Market cap of $56.58B. TTM P/E at 12.17 vs. industry average 16.89. PEG at 1.08 vs. industry average 1.23. Price/Cash flow at 9.73 vs. industry average 10.43. The stock has had a couple of great days, gaining 5.28% over the last week.
Data sourced from Fidelity and Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.