BOSTON (TheStreet) -- Morningstar covers more than 1,700 stocks, only 34 of which receive its highest five-star rating. Of those, the following 10 trade at a deep discount to fair value. As the economy gains steam, these companies' businesses will improve and their shares will reflect intrinsic value. The stocks are predicted to rise at least 49%, and as much as 120%, in the next year. Below, they are ordered by potential return, from good to great.
10. International Speedway (ISCA) promotes motorsport entertainment. The company owns 13 racetracks, including Daytona and Talladega. It hosts more than 100 events a year, generating sales from tickets, concessions, merchandise and broadcasting. It has a wide "economic moat", or sustainable competitive advantage, given its monopoly of big-name tracks and their annual events.
Using a discounted cash flow model, Morningstar estimates International Speedway's fair value at $38, implying 42% upside. The major risks to its investment thesis are a decline in the company's bargaining power, which will be necessary in 2014, when long-term media contracts are renegotiated, and a still cyclically-injured NASCAR fan base. Also, NASCAR television viewership declined in the past few years.
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