Education:Time to Hunt for Undervalued Companies
High-quality Screening Consisting of Free Cash Flow, ROE and PEG
It is time to hunt for undervalued companies since Mr Market is having a fire-sale.
I conducted a high-quality screening of listed companies in the US, based mainly on the 10-10-1 parameters:
- Free Cash Flow Yield > 10%
- Return on Equity > 10%
- PEG < 1
The screen throws out 11 company names as shown below.
Undervalued Energy sector
It is noteworthy that 8 out of 11 names can be found in the Energy sector. They consist of Oil Majors, Exploration and Refining companies. These are undervalued companies yet have the tailwind of higher oil prices.
Financials sector
Within the Financials sector, Interactive Brokers stand out, with a sky-high 36% Free Cash Flow Yield. The company is a beneficiary of Fed rate hikes as interest income will expand significantly. This will offset any drop in trading volume or margin loan balance.
$Exxon Mobil(XOM)$$Occidental(OXY)$$Marathon(MPC)$$Ovintiv Inc.(OVV)$$Interactive Brokers(IBKR)$
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