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Alberto Abaterusso
Alberto Abaterusso
Articles (2269) 

A Trio of Stocks Trading Below Intrinsic Value

Purchasing them now grants margins of safety

August 03, 2020 | About:

Investors seeking bargains may be interested in the following stocks, as they are trading at a discount to the intrinsic value calculated by GuruFocus' free cash flow-based Discounted Cash Flow (DCF) calculator.

These stocks have also received optimistic recommendation ratings from Wall street sell side analysts.

United Microelectronics Corp

The first stock under consideration is United Microelectronics Corp (NYSE:UMC), a Taiwanese semiconductor wafer foundry operator in the U.S., Europe, Taiwan and other Asian countries.

United Microelectronics Corp traded at a price of $3.70 per share at close on Friday, which is lower than the value of $6.32 from the DCF model, yielding a 41.5% margin of safety.

The share price performed strongly over the past year as it rose by 107% for a market capitalization of $10.1 billion and a 52-week range of $1.87 to $4.26.

GuruFocus has assigned a positive score of 6 out of 10 to both the company’s financial strength and its profitability.

Wall Street sell-side analysts issued an overweight recommendation rating for the stock and have established an average target price of $3.98 per share.

The company's top fund holder is MORGAN STANLEY with 10.19% of shares outstanding, followed by VANGUARD GROUP INC with 1.14% and Jim Simons with 0.83%.

Sprouts Farmers Market Inc

The second stock to consider is Sprouts Farmers Market Inc (NASDAQ:SFM), a Phoenix, Arizona-based operator of health-focused grocery stores in the United States.

Sprouts Farmers Market Inc’s share price closed at $26.38 on Friday for a 15.77% margin of safety compared to the DCF valuation of $31.32.

The share price performed very well over the past year as it rose by nearly 43%, determining a market capitalization of $3 billion and a 52-week range of $13 to $28.

GuruFocus has assigned a moderate score of 5 out of 10 to the company’s financial strength and a very good score of 7 out of 10 to its profitability.

As of August, the stock has six strong buy recommendation ratings, seven buy recommendation ratings, nine hold recommendation ratings and one underperform recommendation rating on Wall Street. Sell-side analysts recommend an average target price of $29 per share.

With 11.22% of shares outstanding, PRICE T ROWE ASSOCIATES INC /MD/ is the company's top fund holder, followed by VANGUARD GROUP INC with 9.75% and BlackRock Inc. with 9.55%.

Penn National Gaming Inc

The third stock to consider is Penn National Gaming Inc (NASDAQ:PENN), a Wyomissing, Pennsylvania-based owner and operator of gaming and racing properties and slot machines.

Penn National Gaming Inc’s share price closed at $33.85 on Friday, which is substantially below the DCF valuation of $59.40 for a margin of safety of 43%.

The share price has risen 86.4% over the past year for a market capitalization of $4.74 billion and a 52-week range of $3.75 to $40.14.

GuruFocus has assigned a low score of 3 out of 10 to the company’s financial strength but a positive score of 6 out of 10 to its profitability.

As of August, Wall Street recommends one strong buy rating, five buy ratings and five hold ratings for the stock. The average target price has been established at $38 per share.

The company's top fund holder is BlackRock Inc. with 10.8% of shares outstanding, followed by Ron Baron with 9.18% and FMR LLC with 8.99%.

Disclosure: I have no position in any security mentioned.

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About the author:

Alberto Abaterusso
I am a contributor at GuruFocus. I primarily write about gold, silver and precious metals mining industries. My articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. I hold a Master's Degree in Business Administration from Università degli Studi di Bari (Italy), Aldo Moro. I am based in The Netherlands.

You can follow me on Twitter at https://twitter.com/AAbaterusso

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