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Tiziano Frateschi
Tiziano Frateschi
Articles (2650)  | Author's Website |

5 Undervalued Stocks of Profitable Businesses

Intel tops the list

Companies that have positive and steady net margins and operating margins are often good investments because they can return a solid profit to investors.

According to the GuruFocus discounted cash flow calculator as of Sept. 2, the following undervalued companies have a high margin of safety and have grown their margins over a 10-year period.

Intel

Intel Corp.'s (INTC) net margin and operating margin have grown 20.79% and 28.69% per annum, respectively, over the past 10 years.

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According to the DCF calculator, the stock is undervalued with a 42% margin of safety at $50.79 per share. The price-earnings ratio is 9.35. The share price has been as high as $69.29 and as low as $43.63 in the last 52 weeks; it is currently 26.70% below its 52-week high and 16.41% above its 52-week low.

The chipmaker has a market cap of $216 billion and an enterprise value of $228.54 billion.

The company's largest guru shareholder is Ken Fisher (Trades, Portfolio) with 0.67% of outstanding shares, followed by PRIMECAP Management (Trades, Portfolio) with 0.58% and Chris Davis (Trades, Portfolio) with 0.20%.

NetEase

The net margin of NetEase Inc. (NTES) has grown 38.22% per annum over the past decade. The operating margin has grown 36.88% per annum over the past decade.

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According to the DCF calculator, the stock is undervalued with a 33.43% margin of safety at $491.79 per share. The price-earnings ratio is 19.03. The share price has been as high as $517.79 and as low as $235.01 in the last 52 weeks; it is currently 5% below its 52-week high and 109.26% above its 52-week low.

The Chinese online services provider has a market cap of $62.93 billion and an enterprise value of $54.10 billion.

The company's largest guru shareholder is Jim Simons (Trades, Portfolio)' Renaissance Technologies with 0.91% of outstanding shares, followed by Pioneer Investments (Trades, Portfolio) with 0.32% and Jeremy Grantham (Trades, Portfolio) with 0.21%.

Biogen

Biogen Inc. (BIIB) has grown its net margin and operating margin by 28.56% and 42.49% per year, respectively, over the past 10 years.

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According to the DCF calculator, the stock is undervalued with a 71.22% margin of safety at $279.75 per share. The price-earnings ratio is 8.19. The share price has been as high as $374 and as low as $215 in the last 52 weeks; it is currently 25.04% below its 52-week high and 29.65% above its 52-week low.

The company, which operates in the drug manufacturer industry, has a market cap of $44.29 billion and an enterprise value of $47.78 billion.

The company's largest guru shareholder is PRIMECAP Management (Trades, Portfolio) with 9.87% of outstanding shares, followed by Simons' Renaissance Technologies with 0.86% and the Vanguard Health Care Fund (Trades, Portfolio) with 2.35%.

Canadian Pacific Railway

The net margin of Canadian Pacific Railway Ltd. (CP) has grown 21.22% per annum over the past decade. The operating margin has grown 36.73% annually over the same 10-year period.

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According to the DCF calculator, the stock is undervalued with an 17% margin of safety at $295.5 per share. The price-earnings ratio is 22.86. The share price has been as high as $302.83 and as low as $173.26 in the last 52 weeks; it is currently 2.42% below its 52-week high and 70.55% above its 52-week low.

The company, which operates railroads, has a market cap of $40.20 billion and an enterprise value of $47.30 billion.

The company's largest guru shareholder is Pioneer Investments (Trades, Portfolio) with 0.14% of outstanding shares.

O'Reilly Automotive

O'Reilly Automotive Inc.'s (ORLY) net margin and operating margin have grown 11.24% and 18.26% per year, respectively, over the past 10 years.

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According to the DCF calculator, the stock is undervalued with a 18.52% margin of safety at $473 per share. The price-earnings ratio is 23.20. The share price has been as high as $487.95 and as low as $251.52 in the last 52 weeks; it is currently 3.02% below its 52-week high and 88.14% above its 52-week low.

The company, which provides aftermarket automotive parts, tools and accessories, has a market cap of $35.05 billion and an enterprise value of $40.27 billion.

With 2.49% of outstanding shares, Chuck Akre (Trades, Portfolio) is the company's largest guru shareholder, followed by Diamond Hill Capital (Trades, Portfolio) with 0.44%, Louis Moore Bacon (Trades, Portfolio) with 0.16% and Mario Gabelli (Trades, Portfolio) with 0.12%.

Disclosure: I do not own any stocks mentioned.

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About the author:

Tiziano Frateschi
You can read about me on www.theextraincome.info, which gives suggestions on position trading.

Visit Tiziano Frateschi's Website


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