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Alberto Abaterusso
Alberto Abaterusso
Articles (2620) 

A Trio of Stocks Trading Below Intrinsic Value

These securities trade with margins of safety based on the discounted cash flow model

January 24, 2021 | About:

If in search of bargains, investors may be interested in the following securities, as their share prices are below the intrinsic value calculated by GuruFocus' free cash flow-based discounted cash flow calculator. These stocks also have optimistic recommendation ratings amid the community of Wall Street sell-side analysts.

H&E Equipment Services Inc

The first stock investors may be interested in is H&E Equipment Services Inc (NASDAQ:HEES), a Baton Rouge, Los Angeles-based seller and supplier of industrial equipment services.

The stock traded at $31.40 per share at close on Friday, which is below the intrinsic value of $52.68 calculated from the DCF model, yielding a margin of safety of 40.39%.

The share price has risen by 9.07% over the past year for a market capitalization of $1.13 billion and a 52-week range of $9.12 to $32.75.

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

On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $32 per share.

The company's top fund holder is Vanguard Group Inc with 8.10% of shares outstanding. It is followed by BlackRock Inc. with 7.51% of shares outstanding and Clearbridge Investments, LLC with 6.83% of shares outstanding.

Encore Capital Group Inc

The second stock investors may be interested in is Encore Capital Group Inc (NASDAQ:ECPG), a San Diego, California-based financial services company providing debt recovery solutions services to several businesses worldwide.

The stock closed at $30.24 per share on Friday, which is lower than the DCF valuation of $95.70, yielding a 68.40% margin of safety.

The share price has declined by nearly 16% over the past year, determining a market capitalization of $947.86 million and a 52-week range of $15.27 to $49.01.

GuruFocus has 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.

On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $51.50 per share.

BlackRock Inc. is the largest shareholder of the company with 14.76% of shares outstanding. It is followed by Broad Run Investment Management, LLC with 10.26% of shares outstanding and Vanguard Group Inc with 9.76% of shares outstanding.

DXP Enterprises Inc

The third stock investors may be interested in is DXP Enterprises Inc (NASDAQ:DXPE), a Houston, Texas-based distributor of maintenance, repair and operating products, equipment and related services to North American energy and industrial customers.

At close on Friday, the price was $27.04 per share, which is significantly below the intrinsic value calculated from the DCF model of $65.18. The margin of safety stands at 58.51%.

The share price has declined by 26.82% over the past year, determining a market capitalization of $481.06 million and a 52-week range of $10.44 to $36.94.

GuruFocus has assigned a score of 5 out of 10 to both the company's financial strength rating and its profitability rating.

On Wall Street, the stock has a recommendation rating of buy and a target price of $30 per share.

Amid the top fund holders of the company, BlackRock Inc. is the largest with 14.40% of shares outstanding. Nantahala Capital Management, LLC and American Century Companies Inc are the second and the third in the ranking, owning 8.43% and 6.05%, respectively.

Disclosure: I have no positions in any securities mentioned.

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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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