Emily Smykal, Kapitall: Who doesn't like a good bargain? We looked for companies that are trading below even their lowest target price.
Besides looking for stocks that don't cost an arm and a leg, savvy investors use many tricks to find bargains among the market's many offerings. One way to do so is to consider a company's target price as set by independent analysts.To generate this list we began by searching for stocks that are trading at significant discounts to their fair value based on analyst target price, with the assumption that they will move up to their fair value in the near future.
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We only included stocks with five or more analyst ratings. And because analyst prices are notoriously inflated, we compared current price to the lowest target. Besides screening for rock bottom prices, we also wanted to find signs of undervaluation, so we considered price to free cash flow as an indicator of undervaluation. Price to free cash flow looks at how expensive a company's stock is versus the amount of cash that it is bringing in, minus capital expenditures. Generally, the lower the valuation, the cheaper the stock – although it's always important to keep in mind the specific trends in given industries.
Taken together, we were left with only five stocks on our list.
Dig Deeper: Compare analyst ratings to annual returns for stocks in this article.
Click on the interactive chart to see data over time.
Do you think these stocks will move up to their target prices? Use the list below as a starting point for your own analysis.