17 Stocks Goldman Sachs Thinks Are Cheap Based on This One Metric

Are you a value investor? If so, Goldman Sachs says you may want to add debt-adjusted cash flow to your toolbox for evaluating stocks.

Debt-adjusted cash flow is cash flow from operations minus the increase or decrease in working capital plus after-tax net interest expense, according to a June 1 note by Goldman analysts.

"This metric has the advantage of: backing out changes to working capital," the note read. "When compared to free cash flow, [debt-adjusted cash flow] would be less impacted by inventory drawdowns; and it offers a clean comparison to [cash return on capital invested], which is our preferred measure of returns."

Goldman Sachs considers the following 17 buy-rated stocks below "cheap" based on debt-adjusted free cash flow yield (yet expensive based on free cash flow yield) relative to their sectors.

"These stocks are likely being overlooked by value investors which are more focused on traditional metrics such as FCF yield," the note said.

AMC Entertainment Holdings
AMC Entertainment Holdings

AMC Entertainment (AMC - Get Report) is rated buy with a target price of $31 by Goldman Sachs. The analysts estimate a 6% upside to the stock's target price.

According to the report, AMC Entertainment has a 13% 2016-expected debt-adjusted cash flow yield compared with the media industry's median of 8%. Its free cash flow yield is 5% compared with the industry median of 6%.

AMC Networks
AMC Networks

AMC Networks (AMCX - Get Report) is rated buy with a target price of $93 by Goldman Sachs. The analysts estimate a 47% upside to the stock's target price.

According to the report, AMC Networks has a 10% 2016-expected debt-adjusted cash flow yield compared with the media industry's median of 8%. Its free cash flow yield is 5% compared with the industry median of 6%.

Baxter International
Baxter International

Baxter International (BAX - Get Report) is on Goldman's Americas Buy Conviction List with a target price of $55. The analysts estimate a 27% upside to the stock's target price.

According to the report, Baxter has an 11% 2016-expected debt-adjusted cash flow yield compared with the MedTech industry's median of 6%. Its free cash flow yield is 3% compared with the industry median of 4%.

comScore
comScore

comScore (SCOR - Get Report) is rated buy with a target price of $52 by Goldman Sachs. The analysts estimate a 61% upside to the stock's target price.

According to the report, comScore has a 7% 2016-expected debt-adjusted cash flow yield compared with the information services sector median of 6%. Its free cash flow yield is 3% compared with the industry median of 5%.

Entergy
Entergy

Entergy (ETR - Get Report) is rated buy with a target price of $87 by Goldman Sachs. The analysts estimate a 15% upside to the stock's target price.

According to the report, Entergy has an 11% 2016-expected debt-adjusted cash flow yield compared with the utilities sector median of 10%. Its free cash flow yield is -2% compared with the industry median of 0%.

Mylan
Mylan

Mylan (MYL - Get Report) is rated buy with a target price of $60 by Goldman Sachs. The analysts estimate a 39% upside to the stock's target price.

According to the report, Mylan has an 11% 2016-expected debt-adjusted cash flow yield compared with the pharmaceuticals sector median of 7%. Its free cash flow yield is 3% compared with the industry median of 5%.

PBF Energy
PBF Energy

PBF Energy (PBF - Get Report) is rated buy with a six-month target price of $37 by Goldman Sachs. The analysts estimate a 39% upside to the stock's target price.

According to the report, PBF Energy has a 15% 2016-expected debt-adjusted cash flow yield compared with the sector median of 10%. Its free cash flow yield is 1% compared with the industry median of 2%.

Teck Resources
Teck Resources

Teck Resources (TCK) is rated buy with a six-month target price of $12 by Goldman Sachs. The analysts estimate a 26% upside to the stock's target price.

According to the report, Teck Resources has a 12% 2016-expected debt-adjusted cash flow yield compared with the precious and base metals sector median of 9%. Its free cash flow yield is -5% compared with the industry median of 4%.

Apogee Enterprises
Apogee Enterprises

Apogee Enterprises (APOG - Get Report) is rated buy with a target price of $52 by Goldman Sachs. The analysts estimate a 13% upside to the stock's target price.

According to the report, Apogee Enterprises has a 9% 2016-expected debt-adjusted cash flow yield compared with the building products industry's median of 7%. Its free cash flow yield is 4% compared with the industry median of 5%.

Buffalo Wild Wings
Buffalo Wild Wings

Buffalo Wild Wings (BWLD) is rated buy with a target price of $166 by Goldman Sachs. The analysts estimate a 15% upside to the stock's target price.

According to the report, Buffalo Wild Wings has an 11% 2016-expected debt-adjusted cash flow yield compared with the restaurant industry's median of 7%. Its free cash flow yield is 1% compared with the industry median of 2%.

Carrizo Oil & Gas
Carrizo Oil & Gas

Carrizo Oil & Gas (CRZO - Get Report) is rated buy with a target price of $44 by Goldman Sachs. The analysts estimate a 16% upside to the stock's target price.

According to the report, Carrizo Oil & Gas has an 11% 2016-expected debt-adjusted cash flow yield compared with the small-to-mid-cap exploration and production industry's median of 9%. Its free cash flow yield is -1% compared with the industry median of 0%.

Children's Place
Children's Place

Children's Place (PLCE - Get Report) is rated buy with a target price of $93 by Goldman Sachs. The analysts estimate a 28% upside to the stock's target price.

According to the report, Children's Place has a 12% 2016-expected debt-adjusted cash flow yield compared with the small-to-mid-cap consumer industry's median of 8%. Its free cash flow yield is 0% compared with the industry median of 1%.

Dick's Sporting Goods
Dick's Sporting Goods

Dick's Sporting Goods (DKS - Get Report) is rated buy with a target price of $53 by Goldman Sachs. The analysts estimate a 23% upside to the stock's target price.

According to the report, Dick's Sporting Goods has an 11% 2016-expected debt-adjusted cash flow yield compared with the retail hardline industry's median of 8%. Its free cash flow yield is -1% compared with the industry median of 2%.

PG&E
PG&E

PG&E  (PCG - Get Report) is rated buy with a target price of $62 by Goldman Sachs. The analysts estimate a 4% upside to the stock's target price.

According to the report, PG&E has an 11% 2016-expected debt-adjusted cash flow yield compared with the utilities industry median of 10%. Its free cash flow yield is -1% compared to the industry median of 0%.

PolyOne
PolyOne

PolyOne (POL - Get Report) is rated buy with a target price of $42 by Goldman Sachs. The analysts estimate an 11% upside to the stock's target price.

According to the report, PolyOne has an 8% 2016-expected debt-adjusted cash flow yield compared with the chemicals industry median of 7%. Its free cash flow yield is 4% compared with the industry median of 5%.

Royal Caribbean Cruises
Royal Caribbean Cruises

Royal Caribbean Cruises (RCL - Get Report) is rated buy with a target price of $97 by Goldman Sachs. The analysts estimate a 25% upside to the stock's target price.

According to the report, Royal Caribbean has a 10% 2016-expected debt-adjusted cash flow yield compared with the lodging and gaming industry's median of 9%. Its free cash flow yield is 1% compared with the industry median of 5%.

Sabre
Sabre

Sabre  (SABR - Get Report) is among Goldman's Americas Buy Conviction List with a target price of $39 by Goldman Sachs. The analysts estimate a 38% upside to the stock's target price.

According to the report, Sabre has an 8% 2016-expected debt-adjusted cash flow yield compared with the IT Services industry median of 7%. Its free cash flow yield is 5% compared with the industry median of 6%.

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