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Alberto Abaterusso
Alberto Abaterusso
Articles (2327) 

3 Stocks Trading Cheaply

Their share prices stand below the projected free cash flow

September 24, 2020 | About:

If you want to have more chances to come across bargains, one way is to screen the market for stocks that are likely trading at a discount to their intrinsic value resulting from the projected free cash flow (FCF) valuation model.

Unlike the discounted cash flow or discounted earnings valuation models, the projected FCF model can be applied to assess businesses whose history of revenue and earnings is irregular and may encompass losses in some quarters. The projected FCF uses normalized free cash flow and book value.

The following stocks look undervalued according to the projected FCF model and also hold positive recommendation ratings from Wall Street sell side analysts.

Arbor Realty Trust Inc

The first stock that makes the cut is Arbor Realty Trust Inc (NYSE:ABR), a Uniondale, New York-based real estate investment trust company.

The stock traded at a price of $11.06 per share at close on Wednesday, which represents a discount of nearly 25% to the projected free cash flow of $14.72.

The share price has fallen by 15.7% over the past year for a market capitalization of $1.24 billion and a 52-week range of $3.54 to $15.77.

GuruFocus has assigned a low score of 2 out of 10 for the company's financial strength and a positive score of 5 out of 10 for its profitability.

Wall Street's recommendation rating on Arbor Realty Trust Inc falls between hold and buy, while the average target price stands at $11.40 per share.

Bluerock Residential Growth REIT Inc

The second stock that qualifies is Bluerock Residential Growth REIT Inc (BRG), a New York-based real estate investment trust company.

The stock traded at a price of $7.07 per share at close on Wednesday, which represents a nearly 85% discount to the projected free cash flow of $46.04.

The share price has declined 40% over the past year, which determined a market capitalization of $174.60 million and a 52-week range of $3.79 to $12.49.

GuruFocus has assigned a low score of 3 out of 10 for the company's financial strength and a positive score of 5 out of 10 for its profitability.

Wall Street's recommendation rating on Bluerock Residential Growth REIT Inc falls between hold and buy, while the average target price is $8.58 per share.

Citi Trends Inc

The third stock that meets the criteria is Citi Trends Inc (NASDAQ:CTRN), a Savannah, Georgia-based fashion apparel, accessories and home goods retailer.

The stock traded at a price of $22.86 per share at close on Wednesday, representing a 37.5% discount to the projected free cash flow of $36.58.

The share price has risen 22.8% over the past year, determining a market capitalization of $243.10 million and a 52-week range of $6.70 to $26.25.

GuruFocus has assigned a positive score of 6 out of 10 for both the company's financial strength and profitability.

On Wall Street, the stock holds one strong buy recommendation rating.

Disclosure: I have no positions in any security mentioned in this article.

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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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