5 Undervalued Stocks With Profitable Business

– By Tiziano Frateschi

According to the GuruFocus discounted cash flow calculator as of March 14, the following companies have a high margin of safety and have grown their margins over a 10-year period.

AutoZone

AutoZone Inc.’s (AZO) net margin and operating margin have grown by 11.53% and 19.12%, respectively, per annum over the past 10 years.

According to the DCF calculator, the stock is undervalued with a 27.17% margin of safety at $1,222.49 per share. The price-earnings ratio is 15.50. The share price has been as high as $1,297.82 and as low as $684 in the last 52 weeks; it is currently 5.80% below its 52-week high and 78.49% above its 52-week low.

5 Undervalued Stocks With Profitable Business

The company, which sells aftermarket automotive parts, tools and accessories, has a market cap of $27.12 billion and an enterprise value of $33.74 billion.

The company’s largest guru shareholder is Steven Cohen (Trades, Portfolio)’s Point72 Asset Management with 0.46% of outstanding shares, followed by Tweedy Browne (Trades, Portfolio) with 0.40% and Jim Simons (Trades, Portfolio)’ Renaissance Technologies with 0.29%.

Lennar

The net margin of Lennar Corp. (LEN.B) has grown 8.28% per annum over the past decade. The operating margin has grown 11.26% per annum over the past decade.

According to the DCF calculator, the stock is undervalued with a 68.01% margin of safety at $71.58 per share. The price-earnings ratio is 11.25. The share price has been as high as $76.70 and as low as $18.87 in the last 52 weeks; it is currently 6.68% below its 52-week high and 279.33% above its 52-week low.

The U.S. homebuilder has a market cap of $26.97 billion and an enterprise value of $31.58 billion.

With a 1.76% stake, Barrow, Hanley, Mewhinney & Strauss is the company’s largest guru shareholder, followed by Ken Fisher (Trades, Portfolio) with 0.33% and Smead Value Fund (Trades, Portfolio) with 0.30%.

CGI

CGI Inc. (GIB) has grown its net margin and operating margin by 9.53% and 14.73%, respectively, per year over the past decade.

According to the DCF calculator, the stock is undervalued with a 7.25% margin of safety at $79.31 per share. The price-earnings ratio is 22.50. The share price has been as high as $81.51 and as low as $46.32 in the last 52 weeks; it is currently 2.70% below its 52-week high and 71.22% above its 52-week low.

The T-services provider has a market cap of $20.12 billion and an enterprise value of $22.15 billion.

The company’s largest guru shareholder is Ray Dalio (Trades, Portfolio)’s Bridgewater Associates with 0.01% of outstanding shares, followed by Joel Greenblatt (Trades, Portfolio)’s Gotham Asset Management with 0.01%.

The Cooper Companies

The net margin of The Cooper Companies Inc. (COO) has grown 14.82% per annum over the past decade. The operating margin has grown 17.47% annually over the same period.

According to the DCF calculator, the stock is undervalued with a 23.59% margin of safety at $382.38 per share. The price-earnings ratio is 8.44. The share price has been as high as $401.92 and as low as $236 in the last 52 weeks; it is currently 4.86% below its 52-week high and 61.56% above its 52-week low.

The company, which operates in the medical devices and instruments industry, has a market cap of $18.86 billion and an enterprise value of $20.84 billion.

The company’s largest guru shareholder is Al Gore (Trades, Portfolio) with 4.56% of outstanding shares, followed by Ron Baron (Trades, Portfolio) with 0.49% and Andreas Halvorsen (Trades, Portfolio) with 0.30%.

Quest Diagnostics

Quest Diagnostics Inc.’s (DGX) net margin and operating margin have grown 9.62% and 15.18%, respectively, per year over the past 10 years.

According to the DCF calculator, the stock is undervalued with a 14.77% margin of safety at $119.88 per share. The price-earnings ratio is 11.48. The share price has been as high as $134.71 and as low as $73.02 in the last 52 weeks; it is currently 11.01% below its 52-week high and 64.17% above its 52-week low.

The U.S. company, which provides diagnostic testing, information and services, has a market cap of $16 billion and an enterprise value of $19.70 billion.

With 2.20% of outstanding shares, Chris Davis (Trades, Portfolio) is the company’s largest guru shareholder, followed by Jeremy Grantham (Trades, Portfolio) with 1.17% and Simons’ firm with 0.47%.

Disclosure: I do not own any stocks mentioned.