6 Undervalued Stocks With Growing Earnings

Ulta, Magellan Midstream among companies increasing their profitability

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Oct 19, 2017
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Companies growing their earnings per share (EPS) are often good investments as they can return a solid profit to investors. According to the discount cash flow (DCF) calculator, the following undervalued companies have grown their EPS over a five-year period.

The EPS of Ulta Beauty Inc.(ULTA, Financial) has grown 27% annually over the past five years.

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According to the DCF calculator, the stock is undervalued and is trading with a margin of safety of 5.5% at $202.28 per share. The price-earnings (P/E) ratio is 26.90. The stock price has been as high as $314.86 and as low as $187.96 in the past 52 weeks; it is currently 35.76% below its 52-week high and 7.62% above its 52-week low.

The beauty products retailer has a market cap of $12.43 billion and enterprise value of $12.15 billion.

The company’s largest shareholder among the gurus is Steve Mandel (Trades, Portfolio) with 2.34% of outstanding shares, followed by Spiros Segalas (Trades, Portfolio) with 0.91%, Jim Simons (Trades, Portfolio) with 0.63% and Columbia Wanger (Trades, Portfolio) with 0.11%.

Magellan Midstream Partners LP’s (MMP, Financial) EPS has grown 17% per year over the past five years.

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According to the DCF calculator, the stock is undervalued and is trading with a margin of safety of 37% at $69.08 per share. The P/E ratio is 18.78. The stock price has been as high as $81.77 and as low as $63.92 in the past 52 weeks; it is currently 15.52% below its 52-week high and 8.07% above its 52-week low.

The midstream oil and gas company has a market cap of $15.75 billion and enterprise value of $19.98 billion.

With 0.38% of outstanding shares, Simons is the company's largest guru shareholder, followed by T Boone Pickens (Trades, Portfolio) with 0.02%.

The EPS of CGI Group Inc. (GIB, Financial) has grown 33% per year over the past five years.

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According to the DCF calculator, the stock is undervalued and is trading with a margin of safety of 31.7% at $53.37 per share. The P/E ratio is 18.67. The stock price has been as high as $53.78 and as low as $45.81 in the past 52 weeks; it is currently 0.52% below its 52-week high and 16.50% above its 52-week low.

The information technology services company has a market cap of $15.76 billion and enterprise value of $16.93 billion.

The company’s largest shareholder among the gurus is Jeremy Grantham (Trades, Portfolio) with 0.09% of outstanding shares, followed by Simons with 0.03% and Ray Dalio (Trades, Portfolio) with 0.02%.

AutoZone Inc.’s (AZO) EPS has grown 16% annually over the past five years.

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According to the DCF calculator, the stock is undervalued and is trading with a margin of safety of 51% for $607.87 per share. The P/E ratio is 13.77. The stock price has been as high as $813.70 and as low as $491.13 in the past 52 weeks; it is currently 25.30% below its 52-week high and 23.77% above its 52-week low.

The auto parts retailer has a market cap of $16.92 billion and enterprise value of $21.84 billion.

With 0.36% of outstanding shares, Manning & Napier Advisors Inc. is the company's largest shareholder among the gurus, followed by Joel Greenblatt (Trades, Portfolio) with 0.19%, Simons with 0.12% and PRIMECAP Management (Trades, Portfolio) with 0.09%.

The EPS of The Kroger Co. (KR, Financial) has grown 27% per year over the past five years.

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According to the DCF calculator, the stock is undervalued and is trading with a margin of safety of 30.6% at $20.86 per share. The P/E ratio is 12.41. The stock price has been as high as $36.44 and as low as $19.69 in the past 52 weeks; it is currently 43.80% below its 52-week high and 4.01% above its 52-week low.

The grocery store chain has a market cap of $18.22 billion and enterprise value of $31.34 billion.

The company’s largest shareholder among the gurus is Greenblatt with 0.22% of outstanding shares, followed by Pioneer Investments (Trades, Portfolio) with 0.09% and Dalio with 0.06%.

O'Reilly Automotive Inc.’s (ORLY, Financial) EPS has grown 24% annually over the past five years.

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According to the DCF calculator, the stock is undervalued and is trading with a margin of safety of 34.8% at $212.01 per share. The P/E ratio is 18.56. The stock price has been as high as $286.57 and as low as $169.43 in the past 52 weeks; it is currently 26.02% below its 52-week high and 25.13% above its 52-week low.

The auto parts retailer has a market cap of $18.66 billion and enterprise value of $21.24 billion.

With 3.23% of outstanding shares, the company's largest guru shareholder is Mandel, followed by Ruane Cunniff (Trades, Portfolio) with 1.82%, Chuck Akre (Trades, Portfolio) with 1.36%, Simons with 0.98% and Pioneer Investments with 0.93%.

Disclosure: I do not own any shares of any stocks mentioned in this article.