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A Trio of Low Price-to-Free-Cash-Flow Ratio Stocks to Consider

- By Alberto Abaterusso

When looking for value opportunities, one method is to choose stocks whose trailing 12-month price-to-free-cash-flow ratios are low compared to that of the S&P 500 index, which stands at 15.28 as of the writing of this article. In my view, these equities are more likely to be selling at a compelling price.

Thus, investors may want to consider the three stocks listed below, as they meet the above criteria and are recommended by sell-side analysts on Wall Street.


United Microelectronics Corp

The first stock to consider is United Microelectronics Corp (NYSE:UMC), a Taiwanese semiconductor wafer foundry operator with sales primarily in the U.S., Europe, Taiwan and other Asian countries.

United Microelectronics Corp's price-to-free-cash-flow ratio is 11.06 as of Jan. 26, ranking higher than 83% of 493 companies that operate in the semiconductors industry.

United Microelectronics Corp' free cash flow per share for the trailing twelve months ended in Sept. 2020 stood at $0.90. It grew by 574% over the past year.

Following a 291% increase that took place over the past year, the stock price traded at $9.92 per share at close on Tuesday for a market capitalization of $24.65 billion and a 52-week range of $2.10 to $10.61.

A Trio of Low Price-to-Free-Cash-Flow Ratio Stocks to Consider
A Trio of Low Price-to-Free-Cash-Flow Ratio Stocks to Consider

Currently, United Microelectronics Corp is paying annual dividends to its shareholders, with the last distribution, 13.6 cents per common share, made on Aug. 12, 2020. The payment produces a trailing twelve-month dividend yield of 1.39% as of Jan. 26.

GuruFocus assigned a score of 6 out of 10 to both the financial strength rating and the profitability rating of the company.

Wall Street recommends an overweight recommendation rating with an average target price of $8.68 per share for the stock.

Fleetcor Technologies Inc

The second stock investors may want to consider is Fleetcor Technologies Inc (NYSE:FLT), an Atlanta, Georgia-based information technology services company that focuses on providing businesses with software solutions to handle and pay expenses.

Fleetcor Technologies' price-to-free-cash-flow ratio is 14.60 as of Jan. 26, ranking higher than 66% of 1,307 companies that operate in the software industry.

Fleetcor Technologies Inc's free cash flow per share for the trailing twelve months ended in Sept. 2020 stood at $17.14. The free cash flow increased by 21.6% per year over the past 10 years, by 10.2% per year over the past five years and by 44.9% over the past year.

As a result of a 19.23% decline over the past year, the stock price traded at $261.03 per share at close on Tuesday for a market capitalization of $21.38 billion and a 52-week range of $168.51 to $329.85.

A Trio of Low Price-to-Free-Cash-Flow Ratio Stocks to Consider
A Trio of Low Price-to-Free-Cash-Flow Ratio Stocks to Consider

Fleetcor Technologies Inc does not pay dividends.

GuruFocus assigned a score of 4 out of 10 to the company's financial strength rating and of 9 out of 10 to its profitability rating.

Wall Street recommends a median rating of overweight with an average target price of $292.68 per share for the stock.

AmerisourceBergen Corp

The third stock to consider is AmerisourceBergen Corp (NYSE:ABC), a Chesterbrook, Pennsylvania-based pharmaceutical products distributor in the U.S. and internationally.

AmerisourceBergen Corp's price-to-free-cash-flow ratio is 12.18 as of Jan. 26, ranking higher than 56% of 48 companies that operate in the medical distribution industry.

AmerisourceBergen Corp's free cash flow per share for the trailing twelve months ended in Sept. 2020 was $8.94. The free cash flow has increased by 5.34% per annum since 2016, despite a decline of 9.7% over the past year.

As a result of a 22.31% increase which happened over the past year, the stock price was trading at $108.84 per share at close on Tuesday for a market capitalization of $22.06 billion and a 52-week range of $72.06 to $112.48.

A Trio of Low Price-to-Free-Cash-Flow Ratio Stocks to Consider
A Trio of Low Price-to-Free-Cash-Flow Ratio Stocks to Consider

Currently, AmerisourceBergen Corp is paying a quarterly cash dividend of 44 cents per common share to its shareholders. The next payment is scheduled to be issued on March 1, which generates a forward dividend yield of 1.64% as of Jan. 26.

GuruFocus assigned a score of 6 out of 10 to both the financial strength rating and the profitability rating of the company.

Wall Street recommends a median rating of overweight with an average target price of $120.75 per share for the stock.

Disclosure: I have no position in any security mentioned.

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This article first appeared on GuruFocus.

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