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Debt-Ceiling Standoff Awakens Value Investors

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DDi Corp. (DDIC)

Company Profile: DDi designs, engineers and manufactures printed circuit boards, or PCBs.

AFAM's Target Price: $14.30

Potential Upside From Current Levels: 77%

Clark's Take: Clark notes that while DDi has a customer base of over 1,000 electronics companies, growth within DDi's U.S. military segment deserves a closer focus as military equipment makers need PCB work to be done onshore.

"We like that the company has been consistently profitable and has a solid balance sheet that sports over $1 per share of cash," Clark says. "This micro-cap tech name generates solid free cash flow which supports an attractive dividend yield of 4.8%. Shares trade with a forward earnings multiple of less than eight and an enterprise value-to-EBITDA multiple of 6, almost 30% below its five-year average."

Eni S.p.A. (E)

Company Profile: Based in Rome, Eni S.p.A. is an Italian diversified oil major with exploration and production operations in 43 countries.

AFAM's Target Price: $77.11

Potential Upside From Current Levels: 78%

Clark's Take: Eni shares have faced headwinds due to the company's exposure to Libya. Although near-term geopolitical risks are critical, Clark says those risks are offset by Eni's gas and power business, which he says add a measure of stability since this segment is less sensitive to volatile commodity prices.

"Additionally, we are encouraged by the company's exploration momentum with recently announced oil and gas finds in Norway and Ghana," Clark says. "Non-essential divestitures and solid free-cash-flow generation should continue to strengthen the balance sheet, and support (and possibly increase) the dividend. Shares of Eni currently carry more than a 4% dividend yield and trade at a material discount to peer-group average multiples for earnings, book value and enterprise value-to-EBIDTA."

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CHK $15.25 -0.39%
CTB $37.50 -0.21%
E $37.14 -1.40%
DIS $110.47 0.07%
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