When looking for value opportunities, one method is to choose stocks whose trailing 12-month price-to-free-cash-flow ratios are low compared to that of the S&P 500 index, which stands at 15.28 as of the writing of this article. In my view, these equities are more likely to be selling at a compelling price.
Thus, investors may want to consider the three stocks listed below, as they meet the above criteria and are recommended by sell-side analysts on Wall Street.
United Microelectronics Corp
The first stock to consider is United Microelectronics Corp (UMC, Financial), a Taiwanese semiconductor wafer foundry operator with sales primarily in the U.S., Europe, Taiwan and other Asian countries.
United Microelectronics Corp's price-to-free-cash-flow ratio is 11.06 as of Jan. 26, ranking higher than 83% of 493 companies that operate in the semiconductors industry.
United Microelectronics Corp' free cash flow per share for the trailing twelve months ended in Sept. 2020 stood at $0.90. It grew by 574% over the past year.
Following a 291% increase that took place over the past year, the stock price traded at $9.92 per share at close on Tuesday for a market capitalization of $24.65 billion and a 52-week range of $2.10 to $10.61.
Currently, United Microelectronics Corp is paying annual dividends to its shareholders, with the last distribution, 13.6 cents per common share, made on Aug. 12, 2020. The payment produces a trailing twelve-month dividend yield of 1.39% as of Jan. 26.
GuruFocus assigned a score of 6 out of 10 to both the financial strength rating and the profitability rating of the company.
Wall Street recommends an overweight recommendation rating with an average target price of $8.68 per share for the stock.
Fleetcor Technologies Inc
The second stock investors may want to consider is Fleetcor Technologies Inc (FLT, Financial), an Atlanta, Georgia-based information technology services company that focuses on providing businesses with software solutions to handle and pay expenses.
Fleetcor Technologies' price-to-free-cash-flow ratio is 14.60 as of Jan. 26, ranking higher than 66% of 1,307 companies that operate in the software industry.
Fleetcor Technologies Inc's free cash flow per share for the trailing twelve months ended in Sept. 2020 stood at $17.14. The free cash flow increased by 21.6% per year over the past 10 years, by 10.2% per year over the past five years and by 44.9% over the past year.
As a result of a 19.23% decline over the past year, the stock price traded at $261.03 per share at close on Tuesday for a market capitalization of $21.38 billion and a 52-week range of $168.51 to $329.85.
Fleetcor Technologies Inc does not pay dividends.
GuruFocus assigned a score of 4 out of 10 to the company's financial strength rating and of 9 out of 10 to its profitability rating.
Wall Street recommends a median rating of overweight with an average target price of $292.68 per share for the stock.
AmerisourceBergen Corp
The third stock to consider is AmerisourceBergen Corp (ABC, Financial), a Chesterbrook, Pennsylvania-based pharmaceutical products distributor in the U.S. and internationally.
AmerisourceBergen Corp's price-to-free-cash-flow ratio is 12.18 as of Jan. 26, ranking higher than 56% of 48 companies that operate in the medical distribution industry.
AmerisourceBergen Corp's free cash flow per share for the trailing twelve months ended in Sept. 2020 was $8.94. The free cash flow has increased by 5.34% per annum since 2016, despite a decline of 9.7% over the past year.
As a result of a 22.31% increase which happened over the past year, the stock price was trading at $108.84 per share at close on Tuesday for a market capitalization of $22.06 billion and a 52-week range of $72.06 to $112.48.
Currently, AmerisourceBergen Corp is paying a quarterly cash dividend of 44 cents per common share to its shareholders. The next payment is scheduled to be issued on March 1, which generates a forward dividend yield of 1.64% as of Jan. 26.
GuruFocus assigned a score of 6 out of 10 to both the financial strength rating and the profitability rating of the company.
Wall Street recommends a median rating of overweight with an average target price of $120.75 per share for the stock.
Disclosure: I have no position in any security mentioned.
Read more here:
- A Trio of Potential Bargains
- 3 Banks Trading at a Discount
- 3 Low Price-to-Median-Price-Sales Stocks to Consider
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