One way to have a higher chance of uncovering value opportunities is to screen for stocks whose trailing 12-month price-to-free-cash-flow ratios are low compared to that of the S&P 500 index. The price-to-free-cash-flow ratio of the S&P 500 stands at 11.84 as of the writing of this article.
Thus, investors may want to consider the following three securities, as they meet the above criteria and are recommended by Wall Street sell-side analysts.
Ameriprise Financial Inc
The first stock to consider is Ameriprise Financial Inc (AMP, Financial), a Minneapolis, Minnesota-based asset management company that provides various financial products and services to U.S. and international individual and institutional clients.
Ameriprise Financial's price-to-free-cash-flow ratio is 4.72 as of Dec. 31, ranking higher than 81% of 679 companies that operate in the asset management industry.
Ameriprise Financial's free cash flow per share for the trailing twelve months through the most recent quarter was $41.21. It grew by 5% per year over the past five years and by 45.9% over the past year.
Following a 15.9% increase that took place over the past year, the stock price traded at $194.33 per share at close on Thursday for a market capitalization of $22.93 billion and a 52-week range of $80.01 to $198.16.
Currently, Ameriprise Financial is paying quarterly dividends to its shareholders, with the last distribution, $1.04 per common share, made last year on Nov. 20. The distribution generates a trailing twelve-month dividend yield of 2.1% as of Dec. 31.
GuruFocus assigned a score of 5 out of 10 to the financial strength rating and of 6 out of 10 to the profitability rating of the company.
Wall Street recommends an overweight recommendation rating with an average target price of $208.80 per share for the stock.
United Rentals Inc
The second stock investors may want to consider is United Rentals Inc (URI, Financial), a Stamford, Connecticut-based rental company that on lease terms supplies general and specialty equipment and products to construction and industrial companies.
United Rentals' price-to-free-cash-flow ratio is 10.74 as of Dec. 31, ranking higher than 56% of 649 companies that operate in the business services industry.
United Rentals' free cash flow per share for the trailing twelve months through the most recent quarter was $21.59. The free cash flow grew by 76.3% over the past year.
As a result of a 40.23% rise over the past year, the stock price traded at $231.91 per share at close on Thursday for a market capitalization of $16.73 billion and a 52-week range of $58.85 to $249.60.
Currently, United Rentals is not paying dividends.
GuruFocus assigned a score of 3 out of 10 to the company's financial strength rating and of 8 out of 10 to its profitability rating.
Wall Street recommends a median rating of overweight with an average target price of $250 per share for the stock.
Whirlpool Corp
The third stock investors may want to consider is Whirlpool Corp (WHR, Financial), a Benton Harbor, Michigan-based home appliances producer and marketer.
Whirlpool's price-to-free-cash-flow ratio is 6.68 as of Dec. 31, ranking higher than 75% of 228 companies that operate in the furnishings, fixtures and appliances industry.
Whirlpool's free cash flow per share for the trailing twelve months through the most recent quarter was $27.03. It grew by 5.3% per year over the past five years and by 142.2% over the past year.
After a 22.54% increase which happened over the past year, the stock price traded at around $180.49 per share at close on Thursday for a market capitalization of $11.29 billion and a 52-week range of $64 to $207.30.
Currently, Whirlpool Corp is paying dividends to its shareholders, with the last payment, a $1.25 quarterly cash dividend per common share, made last year on Dec. 15, producing a trailing 12-month dividend yield of 2.69% as of Dec. 31.
GuruFocus assigned a score of 5 out of 10 to the financial strength rating and of 7 out of 10 to the profitability rating of the company.
Wall Street recommends a median rating of hold with an average target price of $211.29 per share for the stock.
Disclosure: I have no position in any security mentioned.
Read more here:
- A Trio of Stocks Trading Below Intrinsic Value
- A Trio of Potential Bargain Stocks
- 3 Stocks Trading Below the GuruFocus Value Line
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