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Alberto Abaterusso
Alberto Abaterusso
Articles (2379) 

A Trio of Cheap Stock Picks to Consider

They are selling at discount to their projected free cash flow

October 12, 2020 | About:

Do you want to enhance your chances to unearth bargains? Then you may want to screen for stocks that are trading at a discount to their intrinsic value as determined by the projected free cash flow (FCF) valuation model.

Unlike the discounted cash flow or discounted earnings valuation models, the projected FCF model can apply to companies whose history of revenue and earnings is not constant and may include losses in some quarters. The projected FCF uses normalized free cash flow and book value.

Thus, investors may want to consider the below listed stocks, as they look undervalued according to the projected FCF model and have also earned positive recommendation ratings from Wall Street sell-side analysts.

Coty Inc

The first stock that makes the cut is Coty Inc (NYSE:COTY).

The New York-based global manufacturer, marketer and seller of beauty products traded at a price of $3.55 per share at close on Friday, which represents a 37.72% discount to the projected FCF of $5.7.

The share price has fallen by 66.7% over the past year, determining a market capitalization of $2.72 billion and a 52-week range of $2.65 to $13.42.

GuruFocus has assigned a score of 3 out of 10 for the company's financial strength and a score of 4 out of 10 for its profitability.

Coty Inc has received a hold recommendation rating with an average target price of $4.40 per share on Wall Street.

JetBlue Airways Corp

The second stock that meets the above listed criteria is JetBlue Airways Corp (NASDAQ:JBLU), a Long Island City, New York-based airlines company.

The stock traded at a price of $12.74 per share at close on Friday, which represents a 39% discount to the projected FCF of $20.91.

The share price has declined 24.6% in the past year for a market capitalization of $3.47 billion and a 52-week range of $6.61 to $21.65.

GuruFocus has assigned a score of 3 out of 10 for the company's financial strength and a score of 7 out of 10 for its profitability.

Wall Street sell-side analysts issued an overweight recommendation rating for the stock and have established an average target price of $13.20 per share.

American International Group Inc

The third stock that qualifies is American International Group Inc (NYSE:AIG), a New York-based provider of insurance products for the needs of its U.S. and international private and commercial customers.

The stock traded at a price of $29.95 per share at close on Friday, reflecting a nearly 52% discount to the projected FCF of $61.79.

The stock price has declined 44.75% over the past year, determining a market capitalization of $25.80 billion and a 52-week range of $16.07 to $56.42.

GuruFocus has assigned a score of 3 out of 10 for the company's financial strength and a score of 4 out of 10 for its profitability.

Wall Street recommends an overweight rating with an average target price of $36.64 per share for this stock.

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 how to pick potential value stocks. Gold, silver and precious metals mining industries is also my cup of tea. 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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