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Small-Cap Guru Chuck Royce's Undervalued Holdings

Chuck Royce (Trades, Portfolio) is CEO of Royce & Associates LLC. The fund invests in smaller companies, primarily those with market capitalizations up to $5 billion, although some of the funds may invest in companies with market capitalizations up to $10 billion.


The following are the stocks the investor holds that are trading with very low P/E and are largely undervalued according to both the DCF calculator and the Peter Lynch earnings line.

Atwood Oceanics Inc. (ATW) is trading at about $10 with a trailing 12-month P/E multiple of 1.70 and an estimated forward P/E multiple of 2.74. Over the last 10 years, the stock has dropped by 51%, and during the last 52 weeks the price has been as high as $35.66 and as low as $9.98.

The DCF model gives a fair value of $189.31 that puts the stock undervalued with a margin of safety of 95% at current prices. The Peter Lynch earnings line suggests a smaller (but still wide enough) margin of safety, giving a fair price of $95.3.

The company is an offshore drilling contractor, engaged in drilling and completion of exploratory and developmental oil and gas wells.

Steven Cohen (Trades, Portfolio) is the largest shareholder among the gurus with 2.31% of outstanding shares, followed by Jim Simons (Trades, Portfolio) with 2.09%, Chuck Royce (Trades, Portfolio) with 1.77% and Arnold Van Den Berg (Trades, Portfolio) with 1.42%.

World Acceptance Corp. (WRLD) is trading at about $37 with a trailing 12-month P/E multiple of 3.00 and an estimated forward P/E multiple of 3.41. Over the last 10 years, the stock has risen by 30% and during the last 52 weeks the price has been as high as $96.23 and as low as $25.30.

The DCF model gives a fair value of $349.59 that puts the stock undervalued with a margin of safety of 89% at current prices. The Peter Lynch earnings line suggests a smaller margin of safety, giving a fair price of $184.

The company provides small-loan consumer finance companies, offering short-term small installment loans, medium-term larger installment loans, related credit insurance and ancillary products and services to individuals.

World Acceptance's largest shareholder among the gurus is Columbia Wanger (Trades, Portfolio) with 4.53% of outstanding shares, followed by Jim Simons (Trades, Portfolio) with 0.37% and Paul Tudor Jones (Trades, Portfolio) with 0.25%.

Fossil Group Inc. (FOSL) is trading at about $36 with a trailing 12-month P/E multiple of 6.00 and an estimated forward P/E multiple of 10.71. Over the last 10 years, the stock has risen by 58%, and during the last 52 weeks the price has been as high as $112.74 and as low as $30.65.

The DCF model gives a fair value of $172.52 that puts the stock as undervalued with a margin of safety of 79% at current prices. The Peter Lynch earnings line suggests a smaller margin of safety, giving a fair price of $96.2.

The company designs, markets and distributes consumer fashion accessories. Its principal offerings include an extensive line of men's and women's fashion watches and jewelry, handbags, small leather goods, belts, sunglasses, soft accessories and clothing.

Columbia Wanger (Trades, Portfolio) is the largest shareholder among the gurus with 2.81% of outstanding shares, followed by Wallace Weitz (Trades, Portfolio) with 2.41%, Joel Greenblatt (Trades, Portfolio) with 1.98% and Jim Simons (Trades, Portfolio) with 0.49%.

Cummins Inc. (CMI) is trading at about $88 with a trailing 12-month P/E multiple of 9.40 and an estimated forward P/E multiple of 10.09. Over the last 10 years, the stock has risen by 274%, and during the last 52 weeks the price has been as high as $148.04 and as low as $84.99.

The DCF model gives a fair value of $215.19 that puts the stock as undervalued with a margin of safety of 59% at current prices. The Peter Lynch earnings line suggests a smaller margin of safety, giving a fair price of $141.

The company designs, manufactures, distributes and services diesel and natural gas engines and engine-related component products, including filtration, aftertreatment, turbochargers, fuel systems, controls systems, air handling systems and electric power generation systems.

The company's largest shareholder among the gurus is HOTCHKIS & WILEY with 2.18% of outstanding shares, followed by Bill Nygren (Trades, Portfolio) with 1.07%, David Rolfe (Trades, Portfolio) with 0.93% and Pioneer Investments (Trades, Portfolio) with 0.37%.

Waddell & Reed Financial Inc. (WDR) is trading at about $28.66 with a trailing 12-month P/E multiple of 9.10 and an estimated forward P/E multiple of 9.29. Over the last 10 years, the stock has risen by 37%, and during the last 52 weeks the price has been as high as $44.67 and as low as $3.02.

The DCF model gives a fair value of $68.84 that puts the stock as undervalued with a margin of safety of 58% at current prices. The Peter Lynch earnings line suggests a smaller margin of safety, giving a fair price of $49.6.

The company operates as a mutual fund and asset management firm. It provides investment management, investment product underwriting and distribution, and shareholder services administration to mutual funds and institutional and separately managed accounts.

Ken Fisher (Trades, Portfolio) is the largest shareholder among the gurus with 2.32% of outstanding shares, followed by Chuck Royce (Trades, Portfolio) with 1.89%, Mario Gabelli (Trades, Portfolio) with 0.48% and Joel Greenblatt (Trades, Portfolio) with 0.41%.

Buckle Inc. (BKE) is trading at about $30 with a trailing 12-month P/E multiple of 9.70 and an estimated forward P/E multiple of 10.11. Over the last 10 years, the stock has risen by 116%, and during the last 52 weeks the price has been as high as $56.13 and as low as $5.12.

The DCF model gives a fair value of $67.25 that puts the stock as undervalued with a margin of safety of 54% at current prices. The Peter Lynch earnings line suggests a smaller margin of safety, giving a fair price of $48.5.

The company is a retailer of casual apparel, footwear, and accessories for fashion conscious young men and women. It markets a selection of mostly brand name casual apparel including denims, other casual bottoms, tops, sportswear, outerwear, accessories, and footwear.

The company's largest shareholder among the gurus is Chuck Royce (Trades, Portfolio) with 12.72% of outstanding shares, followed by Joel Greenblatt (Trades, Portfolio) with 0.43%, Jim Simons (Trades, Portfolio) with 0.39% and Scott Black (Trades, Portfolio) with 0.38%.

CAI International Inc. (CAI) is trading at about $10.08 with a trailing 12-month P/E multiple of 3.80 and an estimated forward P/E multiple of 7.15. Over the last 10 years, the stock has dropped by 55%, and during the last 52 weeks the price has been as high as $25.70 and as low as $8.71.

The DCF model gives a fair value of $28.68 that puts the stock undervalued with a margin of safety of 65% at current prices. The Peter Lynch earnings line suggests a bigger margin of safety, giving a fair price of $41.3.

It is an equipment leasing and management company. The company operates its business through two segments: equipment leasing and equipment management.

Columbia Wanger (Trades, Portfolio) is the largest shareholder of the company among the gurus with 0.39% of outstanding shares, followed by Jim Simons (Trades, Portfolio) with 0.25% and Chuck Royce (Trades, Portfolio) with 0.01%.

DST Systems Inc. (DST) is trading at about $114 with a trailing 12-month P/E multiple of 7.90 and an estimated forward P/E multiple of 17.04. Over the last 10 years, the stock has risen by 88%, and during the last 52 weeks the price has been as high as $134.65 and as low as $92.58.

The DCF model gives a fair value of $210.98 that puts the stock as undervalued with a margin of safety of 46% at current prices. The Peter Lynch earnings line suggests the same margin of safety, giving a fair price of $220.

The company is a provider of technology-based service solutions that help clients grow their business and provide their customers an exceptional experience.

DST Systems' largest shareholder among the gurus is RS Investment Management (Trades, Portfolio) with 1.35% of outstanding shares, followed by Diamond Hill Capital (Trades, Portfolio) with 1.26%, Joel Greenblatt (Trades, Portfolio) with 0.39% and Third Avenue Management (Trades, Portfolio) with 0.13%.

Apple Inc. (AAPL) is trading at about $105 with a trailing 12-month P/E multiple of 12.20 and an estimated forward P/E multiple of 10.56. Over the last 10 years, the stock has risen by 891%, and during the last 52 weeks the price has been as high as $134.54 and as low as $92.00.

The DCF model gives a fair value of $261.91 that puts the stock as undervalued with a margin of safety of 60% at current prices. The Peter Lynch earnings line suggests a smaller margin of safety, giving a fair price of $133.

The company designs, manufactures, and markets mobile communication and media devices, personal computers, and portable digital music players, and sells a variety of related software, services, accessories, networking solutions, and third-party digital content and applications.

Carl Icahn (Trades, Portfolio) is the largest shareholder among the gurus with 0.95% of outstanding shares, followed by David Einhorn (Trades, Portfolio) with 0.2%, Ken Fisher (Trades, Portfolio) with 0.2% and Jeremy Grantham (Trades, Portfolio) with 0.14%.

This article first appeared on GuruFocus.