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Alberto Abaterusso
Alberto Abaterusso
Articles (2610) 

3 Stocks Trading Below Intrinsic Value

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

February 19, 2021 | About:

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

Royal Bank of Canada

The first stock investors may be interested in is Royal Bank of Canada (NYSE:RY), a Toronto, Canada-based bank providing diversified financial services to consumers, households and businesses internationally.

The stock traded at $86.07 per share at close on Thursday, which is below the intrinsic value of $739.45 calculated from the DCF model, yielding a margin of safety of 88.36%.

The share price has risen by 5.74% over the past year for a market capitalization of $122.24 billion and a 52-week range of $49.55 to $86.14.

GuruFocus has assigned a score of 4 out of 10 to the company's financial strength rating and of 6 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 $94 per share.

Bank of Montreal /Can/, Vanguard Group Inc and TD Asset Management Inc are among the largest top fund holders of the company, owning 4.48%, 3.02% and 2.13% of shares outstanding, respectively.

The Toronto-Dominion Bank

The second stock investors may be interested in is The Toronto-Dominion Bank (NYSE:TD), a Canadian provider of various banking products and services to households and businesses.

The stock closed at $59.50 per share on Thursday, which is lower than the DCF valuation of $989.77, yielding a 93.99% margin of safety.

The share price has risen by nearly 4% over the past year, determining a market capitalization of $107.92 billion and a 52-week range of $33.74 to $59.97.

GuruFocus has assigned a score of 3 out of 10 to the company's financial strength rating and of 6 out of 10 to its profitability rating.

On Wall Street, the stock has a median recommendation rating of hold and an average target price of $61 per share.

Royal Bank of Canada is the largest shareholder of the company with 7.96% of shares outstanding. It is followed by Bank of Montreal /Can/ with 3.78% of shares outstanding and Vanguard Group Inc with 2.99% of shares outstanding.

Universal Health Services Inc

The third stock investors may be interested in is Universal Health Services Inc (NYSE:UHS), a King of Prussia, Pennsylvania-based owner and operator of more than 400 medical care facilities in the U.S., the United Kingdom and Puerto Rico.

The stock price was $127.43 per share at close on Thursday, which is below the intrinsic value calculated from the DCF model of $230.45. The margin of safety stands at 44.70%.

The share price has declined by nearly 9% over the past year, determining a market capitalization of $10.83 billion and a 52-week range of $65.20 to $143.84.

GuruFocus has assigned a score of 5 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 recommendation rating of overweight and an average target price of $146.36 per share.

Amid the top fund holders of the company, Vanguard Group Inc is the largest with 9.77% of shares outstanding. BlackRock Inc. and Wellington Management Group LLP are the second and the third in the ranking with 6.12% and 4.30%, 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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