1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Tiziano Frateschi
Tiziano Frateschi
Articles (1938)  | Author's Website |

3 Undervalued Stocks Using the Peter Lynch Analysis

January 19, 2015 | About:

From my watch list, these three companies are undervalued based on the Peter Lynch Price Value.

1) Chicago Bridge & Iron (CBI)

Description: The Company provides conceptual design, technology, engineering, procurement, fabrication, modularization, construction, commissioning, maintenance, program management and environmental services to customers in the energy infrastructure market throughout the world, and is a provider of diversified government services.

Ratios: CBI has a ROC of about 117%, a ROA of 6% and a ROE of 24%. All ratios are at the top of all time for CBI and there is a growing trend over the past 6 years.

Compared to the CBI industry sector, these ratios are better then 95% of other Global Engineering & Construction competitors

Financials: The company has a financial situation that has to be taken under control. Cash to debt ratio is 0.12, and compared to its past, it is at its worst level. Interest Coverage is fine and the compared to industry sector competitors is at an average level.

Growth: Over the last five years, the company had a steady and strong growth rate (per share).

Revenue

+22%

EBITDA

+19%

Free Cash Flow

+6%

BookValue

+23%

EPS

+22%

1421701092680.png

Price: The stock is trading at about $40. The Peter Lynch value gives a price of $92. The stock is undervalued by more then 50%. The DCF value gives a price of $79.

1421701030379.png

Currently, the price is facing a long lasting down-trend that started in April 2014. Down 55% from its 52-week high and up 8% from its 52-week low.

The 200-days Moving Average price is $62

1421701299904.png

Technically, there is a double-bottom at $37. After a break of this level, the price will go on with this downtrend. Uptrend may start if the price will break $43.50.

Dividend Yield: CBI has a small dividend yield of 0.70%. Not suggested for passive income investors

1421701334336.png

2) Geospace Technologies Corp (GEOS)

Description: The Company designs, manufactures and distributes thermal imaging equipment and thermal media products targeted at the screen print, point of sale, signage and textile market sectors. It also designs and manufactures other industrial products, including thermal printing equipment and film.

Ratios: Geospace Technologies has top ratios of Global Scientific & Technical Instruments industry, which are better then 80% of competitors. The current situation is not the best in this company's history, but all is at a double-digit value. A ROC of 20%, a Return on Equity of 11% and a Return on Assets of 10%.

Financials: The company has no debts and a financial Strength of 8 out of 10.

Growth: Over the last five years, the company had a steady growth rate (per share).

Revenue

+17%

EBITDA

+30%

BookValue

+23%

EPS

+75%

1421701704463.png

Price: The stock is trading at about $24. The Peter Lynch chart gives a price of $70. The DCF value gives a price of $79.

Currently, the price is down 72% from its 52-week high and up 5% from its 52-week low.

The price has been on a downward trend since November 2013 but the price is all testing the down-trend line. So is worth to keep an eye open for possible jumps. The problem looks like to be just the price.

1421702361039.png

3)TransGlobe Energy Corp (TGA)

Description:The Company changed its name to TransGlobe Energy Corporation on April 2, 1996 and on June 9, 2004, the Company continued from the Province of British Columbia to the Province of Alberta pursuant to the ABCA. The Company is an oil and gas engaged in the exploration, development and production of crude oil and natural gas.

Ratios: TransGlobe Energy Corp has strong and steady ratios. A ROC of 30%, a Return on Equity of 13% and a Return on Assets of 10%.

These levels are better then 95% of other Global Oil & Gas E&P competitors.

Compared to its history, these levels are at an average position.

Financials: The company has a Cash To Debt of 0.94 and a financial strength of 7 out of 10.

Growth: Over the last five years, the company had an amazing growth rate (per share).

Revenue

+57%

EBITDA

+28%

BookValue

+31%

1421701874864.png

Price: The stock is trading at about $3. The Peter Lynch value gives a price of $18. The DCF value gives a price of $12.

Currently, the price is down 64% from its 52-week high and up 12% from its 52-week low.

The average price of the last 200 days is at $5.80.

1421701835243.png

Technically, the down trend lasts since 2010 and even here is just a matter of fluctuation of price. We have to wait the right time to enter, a good reversal pattern. There are no doubts the company is good.

1421702565252.png

Dividend Yeld: TGA has an amazing dividend yeld of 4.95% that is growing with very few pauses

1421701996775.png

Summarizing the 3 stocks:

CBI

GEOS

TGA

ROC

117%

20%

30%

ROA

6%

11%

13%

ROE

24%

10%

10%

Compared to Industry (better then)

95%

80%

95%

Cash to Debt

0.12

No Debts

0.94

Revenue Growth (5y)

57%

22%

57%

EBITDA Growth (5y)

38%

19%

28%

BookValue Growth (5y)

21%

23%

31%

Current Price

40$

24$

3$

Peter-Lynch Price

92$ (+130%)

70$ (+191%)

18$ (+500%)

DCF Price

79$ (+97%)

79$ (+229%)

12$ (+300%)

52-Weeks High

-55%

-72%

-64%

52-Weeks Low

+8%

+5%

+12%

Trend

Down

Down

Down

Dividend Yeld

0,70%

N/A

4,95%

Take a look at all 3 companies, but of course I would take a closer look at TGA, not just because of the price and potential estimated price the stock should have now, but also for the dividend yield.

These 3 companies are all facing a strong downtrend, so the only problem is to find a good time to open a position. It may takes weeks, months… but for sure is worth to put all them into our watching list.

Read more about me at TheExtraIncome

About the author:

Tiziano Frateschi
You can read about me on www.theextraincome.info, which gives suggestions on position trading.

Visit Tiziano Frateschi's Website


Rating: 5.0/5 (3 votes)

Voters:

Comments

psoma74
Psoma74 - 4 years ago    Report SPAM

nice undervalued pics

Tiziano Frateschi
Tiziano Frateschi premium member - 4 years ago

Thank you.

You can check my other articles and more are coming soon.

Hope to give you other good advices in future

Please leave your comment:


Performances of the stocks mentioned by Tiziano Frateschi


User Generated Screeners


pjmason14Momentum
pascal.van.garsseHigh FCF-M2
kosalmmuse6
kosalmmuseBest one1
DBrizanall 2019Feb26
kosalmmuseBest one
DBrizanall 2019Feb25
kosalmmuseNice
kosalmmusehan
MsDale*52-Week Low
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat

{{numOfNotice}}
FEEDBACK