This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

7 Stocks Trading Below $5 Undervalued By Free Cash Flow

Stocks in this article: AKS ALU CRWN DNN HLIT NOK PT

Do you prefer stocks trading at low share prices? If so, one thing to keep in mind is the possibility of “value traps,” or stocks that appear to hold value with low share prices but in fact are trading there for a negative reason.

We decided to look for stocks that are undervalued by levered free cash flow/enterprise value. This will provide a starting point for your analysis. This ratio gives us the money that the business can use to grow and pay dividends to shareholders. Any possibility of a dividend payout nowadays is looked at positively. We also screened for stocks with a market cap of at least $300 million, and trading under $5.

Interactive Chart: Press Play to compare changes in market cap over the last two years for the seven stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

Do you think these stocks trading under $5 are a cheap bargain? Use this list as a starting point for your own analysis.

Analyze These Ideas: Read  descriptions for all companies mentioned

1. AK Steel Holding Corporation ( AKS): Produces flat-rolled carbon, stainless, and electrical steels, and tubular products primarily in the United States and internationally. Market cap at $567.66M, most recent closing price at $4.28. Levered free cash flow at $249.55M vs. enterprise value at $1.80B (implies a LFCF/EV ratio at 13.86%).

2. Alcatel-Lucent, S.A. ( ALU): Provides products, solutions, and transformation services that enable service providers, enterprises, governments, and strategic industries to deliver voice, data, and video communication services to end-users worldwide. Market cap at $2.59B, most recent closing price at $1.11. Levered free cash flow at $656.25M vs. enterprise value at $2.64B (implies a LFCF/EV ratio at 24.86%).

3. Crown Media Holdings Inc. ( CRWN): Through its subsidiary, Crown Media United States, LLC, owns and operates pay television channels in the United States and Puerto Rico. Market cap at $676.2M, most recent closing price at $1.88. Levered free cash flow at $161.37M vs. enterprise value at $1.10B (implies a LFCF/EV ratio at 14.67%).

4. Denison Mines Corp. ( DNN): Engages in the exploration, development, mining, and milling of uranium primarily in the United States and Canada. Market cap at $470.46M, most recent closing price at $1.21. Levered free cash flow at $43.76M vs. enterprise value at $402.85M (implies a LFCF/EV ratio at 10.86%).

5. Harmonic Inc. ( HLIT): Designs, manufactures, and sells video products and system solutions that enable service providers to deliver broadcast and on-demand services. Market cap at $561.53M, most recent closing price at $4.85. Levered free cash flow at $75.14M vs. enterprise value at $355.66M (implies a LFCF/EV ratio at 21.13%).

6. Nokia Corporation ( NOK): Provides Internet and digital mapping and navigation services worldwide. Market cap at $14.53B, most recent closing price at $3.79. Levered free cash flow at $1.39B vs. enterprise value at $9.07B (implies a LFCF/EV ratio at 15.33%).

7. Portugal Telecom SGPS SA ( PT): Provides telecommunications services in Portugal, Brazil, and Africa. Market cap at $4.24B, most recent closing price at $4.73. Levered free cash flow at $2.44B vs. enterprise value at $13.96B (implies a LFCF/EV ratio at 17.48%).

 

Written by Kapitall’s Sabina Bhatia

 

 

null

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,387.21 -291.49 -1.65%
S&P 500 2,029.55 -27.54 -1.34%
NASDAQ 4,681.4970 -90.2660 -1.89%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs