3 Potential Value Opportunities

The DCF model suggests these stocks could have good value

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Sep 13, 2022
Summary
  • APA, Western Digital and Alto Ingredients are trading at a discount to their DCF values.
  • Wall Street is also positive about these stocks.
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When seeking value opportunities, investors could be interested in the following stocks since their prices are trading at a discount to the intrinsic value calculated by GuruFocus' earnings-based discounted cash flow calculator.

Furthermore, sell-side analysts on Wall Street have issued positive recommendation ratings for these stocks, indicating they expect share prices to rise.

APA

The first stock that meets the criteria is APA Corp. (

APA, Financial), a Houston-based oil and gas producer with mineral activities in the U.S., Egypt, the United Kingdom and offshore Suriname. The company also operates gathering, processing and transmission facilities in West Texas and owns pipelines from the Permian Basin to the Gulf Coast.

The stock traded around $39.53 per share during regular hours on Tuesday, below the intrinsic value estimate of $110.99 from the DCF model and providing a margin of safety of about 64.38%.

The share price went up 104.08% over the past year, determining a market capitalization of $12.89 billion and a 52-week range of $18.52 to $51.95.

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

On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $54.44 per share.

Western Digital

The second stock that makes the cut is Western Digital Corp. (

WDC, Financial), a San Jose, California-based developer and provider of data storage devices and solutions in the U.S. and internationally.

The stock traded around $39.88 per share during regular hours on Tuesday, below the intrinsic value estimate of $59.30 from the DCF model and providing a margin of safety of about 32.78%.

The share price declined by 30.69% over the past year, determining a market capitalization of $12.54 billion and a 52-week range of $39.68 to $69.36.

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

On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $57.70 per share.

Alto Ingredients

The third stock that qualifies is Alto Ingredients Inc. (

ALTO, Financial), a Pekin, Illinois-based company that manufactures and markets specialty alcohols and essential ingredients in the U.S. The products are used in cosmetics, pharmaceuticals, alcoholic beverages, liquid commercial animal feed and pet food. The company also supplies fuel-grade ethanol used as a transportation fuel and distills corn oil used as feedstock for biodiesel.

The stock traded around $4.03 per share during regular hours on Tuesday, below the intrinsic value estimate of $8.61 from the DCF model and providing a margin of safety of about 53.08%.

The share price has dropped 13.86% over the past year, determining a market capitalization of $297.47 million and a 52-week range of $3.51 to $7.37.

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GuruFocus has assigned a score of 8 out of 10 to the company's financial strength and 4 out of 10 to its profitability.

On Wall Street, the stock has a median recommendation rating of buy and an average target price of $11.67 per share.

Disclosures

I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours. Click for the complete disclosure
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