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3 Stocks Trading at a Discount

These stocks are potential bargains based on projected free cash flow

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Nov 28, 2021
Summary
  • Chubb Ltd, ManpowerGroup Inc and JELD-WEN Holding Inc are each trading below their projected free cash flow, which is an estimate of intrinsic value
  • The projected FCF model can be used to evaluate companies with an irregular history of revenue and earnings.
  • Wall Street likes these businesses.
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If you want to enhance your likelihood to identify bargains, one way to do so is to screen the market for equities that are trading at a discount to their intrinsic value estimates as calculated from the projected free cash flow (FCF) valuation model.

Unlike the discounted cash flow or discounted earnings valuation models, the projected FCF model allows investors to estimate the value of those companies whose record of revenue and earnings is not regular and may also incorporate losses in some quarters. The projected FCF uses normalized free cash flow and book value.

The following stocks seem to be underestimated by the market according to the projected FCF model. They also have positive recommendation ratings among sell-side analysts on Wall Street.

Chubb Ltd

The first company that matches the criteria is Chubb Ltd (

CB, Financial), a Zurich, Switzerland-based insurance company.

The stock was trading at around $184.55 per share at close on Friday, which represents a discount to the projected free cash flow of $261.05 per share. The share price has risen by 24.84% over the past year for a market capitalization of $79.49 billion and a 52-week range of $144 to $197.92.

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GuruFocus has assigned a score of 4 out of 10 for the company's financial strength rating and of 6 out of 10 for its profitability rating.

On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $213.83 per share.

ManpowerGroup Inc

The second stock that holds the criteria is ManpowerGroup Inc (

MAN, Financial), a Milwaukee, Wisconsin-based global provider of workforce solutions and services primarily in the Americas.

The stock traded at around $93.52 per share at close on Friday, which represents a discount to the projected free cash flow of $139.01 per share. The price has risen 8% over the past year for a market capitalization of $5.07 billion and a 52-week range of $85.97 to $125.07.

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GuruFocus has assigned a score of 6 out of 10 for the company's financial strength rating and of 7 out of 10 for its profitability rating.

On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $124 per share.

JELD-WEN Holding Inc

The third stock that qualifies is JELD-WEN Holding Inc (

JELD, Financial), a Charlotte, North Carolina-based designer and manufacturer of doors and windows primarily in North America .

The stock traded at around $25.15 per share at close on Friday, standing below the projected free cash flow of $25.93. The share price has risen 4% over the past year for a market capitalization of $2.30 billion and a 52-week range of $22.70 to $31.47.

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GuruFocus has assigned a score of 4 out of 10 for the company's financial strength rating and of 6 out of 10 for its profitability rating.

On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $30.92 per share.

Disclosures

I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
The views of this author are solely their own opinion and are not endorsed or guaranteed by GuruFocus.com
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