If you’re looking for investing strategies to help identify undervalued stocks with strong cash holdings, look no further. Your education starts here.
We put together a list of potentially undervalued and fiscally sound stocks by finding names that met all of the following conditions:
- Trailing twelve month (TTM) net profit margin is at least 30% higher than the net profit margin in the previous period. Net profit margin (TTM) is also above 10%.
- Current price is 20% or more below its target price
- Cash and cash equivalents over the recent quarter greater than long-term debt.
- Market cap above $500M
Lastly, we narrowed down our results by identifying the stocks that have experienced significant levels of net institutional buying over the current quarter.
Investing can be complicated, especially when so many accounting terms are being used. If any of the terms above don’t make sense to you, have no fear. Let’s take a look at what each of these metrics mean and why they are important:
Cash and cash equivalents exceeding long-term debt: It is always good for a company to have solid holdings of cash and cash equivalents. Cash is the most liquid asset because it can easily be used to pay off debts, taxes, dividends, etc. in a pinch, while other assets like property and inventory take time and/or effort to convert to cash, a concept known as "illiquidity".
When a company has more cash than debt, risks to stockholders are lessened because these companies are better prepared to carry their debt and more likely to pay out dividends.
Increasing Net Profit Margin: Net profit margin describes how much profit a company keeps for every $1 it generates in revenues. It is calculated as net profits divided by sales and is reported as a percentage. Increased net profit margin is a good thing because it means the company is retaining more earnings and implies that it is in better control of its costs.
Trailing twelve months (TTM): TTM is an indication that the calculated data has come from the last twelve months. For example, if data released in July 2045 is "TTM" (ie, P/E TTM or "Trailing P/E"), this means the price and the earning-per-share data comes from the twelve-month period of August 2044 to July 2045.
Target Price: Analyst target prices can be very useful guides for investors. The target price is a price level set by analysts that, based on their data and estimates, represents their predictions for that company in the upcoming year. Because analysts often have different opinions, we use the average analyst target price. Although target price is upwardly biased, a steep discount from this number can signal that the company has more value to price in (meaning, the stock price may rise).
Institutional Buying: Institutional investors are also known as "big money" investors or managers. They represent big pools of money such as investment banks, pension funds, mutual funds, hedge funds, endowment funds, etc. When they invest in stocks, they can invest hundreds of thousands of dollars or more at one time.
Regular investors pay attention to what institutional investors do because it is easy enough to assume that the big money managers know what they are doing -- or at the very least know more than the average investor. This is why these investors are also sometimes referred to as "smart money.” Note, investors should never blindly trust analysts or institutional investors or anybody else. Use information on institutional investing with other research before making any investing decisions.
Given the data points, do you think these companies will reach their target price? Are institutions making the right moves? Use the list below as a starting-off point for your own analysis. Click on the heat maps to access free, interactive tools to analyze these ideas
Data sorted in alphabetical order.
Analyze These Ideas (Tools Will Open In A New Window)
1. Access a thorough description of all companies mentioned
2. Compare analyst ratings for all stocks mentioned below
3. Visualize annual returns for all stocks mentioned
1. GeoResources, Inc. (GEOI): Independent Oil & Gas industry. Market cap at $607M. Net profit margin (TTM) at 21.61% vs. prior net profit margin (TTM) at 0.17%. Recent price closing at $23.84, compared to target price of $31.86 (implies a potential upside of 33.63%. Cash and equivalents (for recent quarter) at 42.15M vs. long-term debt of $0. Net institutional shares purchased over the current quarter represent 42.74% of the 19.42M share float.
2. HFF, Inc. (HF): Mortgage Investment industry. Market cap at $512M. Net profit margin (TTM) at 12.79% vs. prior net profit margin (TTM) at 0.09%. Recent price closing at $14.23, compared to target price of $18.00 (implies a potential upside of 26.49%. Cash and equivalents (for recent quarter) at 72.34M vs. long-term debt of $209K. Net institutional shares purchased over the current quarter represent 12.28% of the 28.51M share float.
3. Hollysys Automation Technologies Ltd (HOLI): Industrial Electrical Equipment industry. Market cap at $512M. Net profit margin (TTM) at 16.46% vs. prior net profit margin (TTM) at 0.04%. Recent price closing at $9.41, compared to target price of $14.84 (implies a potential upside of 57.68%. Cash and equivalents (for recent quarter) at 102M vs. long-term debt of $33.17M. Net institutional shares purchased over the current quarter represent 10.38% of the 31.78M share float.
4. LogMeIn, Inc. (LOGM): Information Technology Services industry. Market cap at $909M. Net profit margin (TTM) at 17.14% vs. prior net profit margin (TTM) at 0.12%. Recent price closing at $37.78, compared to target price of $50.43 (implies a potential upside of 33.48%. Cash and equivalents (for recent quarter) at 176M vs. long-term debt of $0. Net institutional shares purchased over the current quarter represent 9.81% of the 20.38M share float.
5. Mercury Computer Systems Inc. (MRCY): Computer Peripherals industry. Market cap at $573M. Net profit margin (TTM) at 13.96% vs. prior net profit margin (TTM) at 0.07%. Recent price closing at $18.99, compared to target price of $25.00 (implies a potential upside of 31.65%. Cash and equivalents (for recent quarter) at 156M vs. long-term debt of $86K. Net institutional shares purchased over the current quarter represent 20.56% of the 27.73M share float.
6. Optimer Pharmaceuticals, Inc. (OPTR): Biotechnology industry. Market cap at $553M. Net profit margin (TTM) at 14.19% vs. prior net profit margin (TTM) at -40.69%. Recent price closing at $11.94, compared to target price of $18.67 (implies a potential upside of 56.34%. Cash and equivalents (for recent quarter) at 180M vs. long-term debt of $0. Net institutional shares purchased over the current quarter represent 12.37% of the 42.04M share float.
7. TransGlobe Energy Corporation (USA) (TGA): Independent Oil & Gas industry. Market cap at $911M. Net profit margin (TTM) at 17.98% vs. prior net profit margin (TTM) at 0.08%. Recent price closing at $12.41, compared to target price of $16.77 (implies a potential upside of 35.12%. Cash and equivalents (for recent quarter) at 8.63M vs. long-term debt of $56.73M. Net institutional shares purchased over the current quarter represent 14.71% of the 69.33M share float.
(List compiled by Becca Lipman)
I sat down not half hour ago to watch a replay of Raw. For the third week in a row, I have watched a full WWE show in order to see one man. A man who in the last month has become the "saviour" of wrestling for some fans and a mainstream publicity magnet for the WWE. The most impressive thing, it seems, is that he's only unleashed it now, a month before he leaves the company.
When the news first broke that CM Punk was planning to leave the WWE after his contract expired, I wasn't surprised. I honestly didn't and still wouldn't blame him. Not only because of the backstage stories of his poor treatment; from being buried in developmental, to his nickname as the "King of the Indies" (1).
Not only because it seems Punk has never been considered a member of the "Youth Movement", or as an established main eventer like Cena or Orton for sometime now. Leaving him essential in no man's land. Not only because Punk, a three time WWE world champion (four time if including the ECW world title), has been used for a while now to only advance Vince's home-grown talent.
But because he has never been truly valued as a WWE superstar. That was until now it seems.
While others like Chris Jericho and Batista left the WWE having been buried, Punk has used his last month in the WWE it seems to show Vince why and how he can draw money. He's taken the unlimited potential which guys like Paul Heyman and Steve Austin (3) have noted in him and used it to punch Vince right in his giant grapefruit's.
online reputation management strategy
08/03/2011: U.S. Department of Justice, EPA to Hold <b>News</b> <b>...</b>
3, 2011) - Representatives of the U.S. Department of Justice and the U.S. Environmental Protection Agency will hold a news conference at 1:30 p.m. tomorrow, Thursday, Aug. 4, in St. Louis, Mo., to discuss a significant ...
08/03/2011: U.S. Department of Justice, EPA to Hold <b>News</b> <b>...</b>CBS <b>News</b> Chief: 'We Did Lose Some Viewers' During Katie Couric <b>...</b>
Jeff Fager sees a brighter future ahead with Scott Pelley as anchor.
CBS <b>News</b> Chief: 'We Did Lose Some Viewers' During Katie Couric <b>...</b><b>News</b> attacks — Crooked Timber
I've received the ultimate accolade from News Corporation, graduating from snarky asides and dark mutterings in which I'm identified only indirectly to a full-length hit piece in our only national (general) newspaper, ...
<b>News</b> attacks — Crooked Timber
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