Looking for a deal? So are hedge funds - so we found five undervalued stocks attracting institutional investors.
The US stock market hit the ground running this week. Which begs the question: is it time for investors to go all in, or take some gains? We decided to see what major institutional investors have been up to.
We began by screening for all stocks traded in the US that experienced significant net institutional purchases over the last quarter, representing at least 5% of share float. This indicates that institutional investors such as hedge fund managers and mutual fund managers expect these stocks to outperform in the future.
So why are these companies appealing to institutional buyers? Next we looked for signs of undervaluation, starting with price/earnings to growth - PEG - ratios.
A low PEG ratio, typically under 1, suggests a stock is undervalued relative to earnings growth. The PEG ratio is used to determine a stock's value while providing a broader picture than just the P/E ratio.
This left us with about 40 names, so we screened for an additional sign of undervaluation: a stock's Graham Number. The Graham Number is a measure of maximum fair value based on a stock's EPS and book value per share (BVPS), created by the champion of value investing Benjamin Graham.
Graham Number = SQRT(22.5 x TTM EPS x MRQ BVPS)
The equation assumes that P/E should not be higher than 15 and P/BV should not be higher than 1.5. Stocks trading well below their Graham Number may also be considered undervalued.
This left us with five stocks on our list.
Click on the interactive chart to see data over time.
&amp;amp;amp;amp;amp;lt;p&amp;amp;amp;amp;amp;gt;Your browser does not support iframes.&amp;amp;amp;amp;amp;lt;/p&amp;amp;amp;amp;amp;gt;
Do you agree that these stocks look undervalued? Use the list below as a starting point for your own analysis.
1. CPI Aerostructures Inc. (CVU, Earnings, Analysts, Financials): Engages in the contract production of structural and other aircraft parts for prime defense contractors, the United States Air Force, and other branches of the armed forces. Market cap at $97.93M, most recent closing price at $11.67.
2. Heritage Oaks Bancorp (HEOP, Earnings, Analysts, Financials): Operates as the holding company for Heritage Oaks Bank that provides commercial banking services to retail customers, and small to medium-sized businesses in California. Market cap at $158.82M, most recent closing price at $6.32.
3. Hardinge Inc. (HDNG, Earnings, Analysts, Financials): Engages in the design, manufacture, and distribution of machine tools. Market cap at $170.98M, most recent closing price at $14.66.
4. LeapFrog Enterprises Inc. (LF, Earnings, Analysts, Financials): Provides technology-based learning platforms worldwide. Market cap at $641.07M, most recent closing price at $9.40.
5. CACI International Inc. (CACI, Earnings, Analysts, Financials): Provides information technology (IT) and professional services to the U. Market cap at $1.56B, most recent closing price at $67.60.
(List compiled by Emily Smykal, analyst ratings sourced from Zacks Investment Research. All other data sourced from Finviz.)
Use Kapitall's Tools: Looking for ways to analyze this list?Use this article snapshot as a launch pad (click here for help): Simply click on the links, and use Kapitall's tab navigation to browse through the data...
Analyze These Ideas: Getting StartedRead descriptions for all companies mentioned Access a performance overview for all stocks in the list Compare analyst ratings for the companies mentioned Compare analyst ratings to annual returns for stocks mentioned Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)
Dig Deeper: Access Company Snapshots, Charts, FilingsCPI Aerostructures Inc. (CVU, Chart, Download SEC Filings) Heritage Oaks Bancorp (HEOP, Chart, Download SEC Filings) Hardinge Inc. (HDNG, Chart, Download SEC Filings) LeapFrog Enterprises Inc. (LF, Chart, Download SEC Filings) CACI International Inc. (CACI, Chart, Download SEC Filings)
© Kapitall, Inc. All rights reserved. Kapitall Wire is a division of Kapitall, Inc. Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.
Kapitall Wire offers free cutting edge investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by Kapitall Inc., and its affiliate companies.
Open a free account today get access to virtual cash portfolios, cutting-edge tools, stock market insights, and a live brokerage platform through our affiliated company, Kapitall Generation, LLC.
Securities products and services are offered by Kapitall Generation, LLC - a FINRA/SIPC member.