When screening the market for value opportunities, one method is to choose stocks whose trailing 12-month price-to-free cash flow ratios are low compared to that of the S&P 500 Index, which stands at around 10.93 currently.
Thus, investors could be interested in the following stocks as they meet the above criteria and are recommended by sell-side analysts on Wall Street.
MiX Telematics
The first stock to consider is MiX Telematics Ltd. (MIXT, Financial), a Boca Raton, Florida-based provider of software application solutions for fleet and mobile asset management.
MiX Telematics' price-to-free cash flow ratio is 10.65 as of March 22, ranking higher than 83% of 1,333 companies that operate in the software industry.
MiX Telematics' free cash flow per share for the trailing 12 months ended in December stood at $1.26, growing 226.20% over the past year.
As a result of a 78.3% increase that occured over the past year, the stock closed at $13.46 per share on Monday for a market capitalization of $298.94 million and a 52-week range of $7 to $15.
Currently, MiX Telematics is paying quarterly dividends to its shareholders, with the most recent payment of 6.8 cents per common share issued on March 4. The payment produces a trailing 12-month dividend yield of 1.83% as of March 22.
GuruFocus assigned a score of 8 out of 10 to the company's financial strength and 9 out of 10 to its profitability.
On Wall Street, the stock has a median recommendation rating of buy with an average target price of $18.50 per share.
Civeo
The second stock investors may want to consider is Civeo Corp. (CVEO, Financial), a Houston-based provider of accommodations to workforces in the natural resource industry in North America and Australia.
Civeo's price-to-free cash flow ratio is 2.07 as of March 22, ranking higher than 94% of 662 companies that operate in the business services industry.
The company's free cash flow per share for the trailing 12 months stood at $7.58. The free cash flow increased by 136.60% over the past year.
As a result of a nearly 215% increase that occurred over the past year, the stock traded at $15.68 per share on Monday for a market capitalization of $224.01 million and a 52-week range of $4.08 to $20.67.
Currently, Civeo does not pay a dividend.
GuruFocus assigned a score of 3 out of 10 to the company's financial strength and 2 out of 10 to its profitability.
On Wall Street, the stock has a median recommendation rating of buy with an average target price of $30 per share.
Salem Media Group
The third stock to consider is Salem Media Group Inc. (SALM, Financial), an Irving, Texas-based multimedia operator.
Salem Media Group's price-to-free cash flow ratio is 4.66 as of March 22, ranking higher than 84% of 557 companies that operate in the media-diversified industry.
The company's free cash flow per share for the trailing 12 months was 67 cents. The free cash flow increased by 95.40% over the past year.
Thanks to a 208.4% increase over the past year, the stock was trading at $3.12 per share at close on Monday for a market capitalization of $83.63 million and a 52-week range of $0.69 to $3.95.
Currently, Salem Media Group is not paying dividends. Due to the Covid-19 pandemic, the board of directors decided to temporarily suspend the distribution, but may reinstate it this year.
GuruFocus assigned a score of 3 out of 10 to the company's financial strength and 5 out of 10 to its profitability.
On Wall Street, the stock has a median recommendation rating of buy with an average target price of $4.13 per share.
Disclosure: I have no positions in any securities mentioned.
Read more here:
- 3 Stocks That Could Represent Bargain Opportunities
- A Trio of Stocks Trading Below Intrinsic Value
- A Trio of Low Median Price-Sales Stocks to Consider
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