r/valueinvesting
A few names near 52-week lows with decent cash flow and valuation signals
Highlights DOX, EPAM, LDOS, MMS as value plays near 52-week lows with strong FCF yields and deep discounts to intrinsic value.
- All four stocks trade at significant discounts to their estimated intrinsic values (144% to 343%).
- Strong free cash flow yields ranging from 5.4% to 7.1% and solid ROICs.
- Manageable debt levels and consistent historical cash flow generation.
- Revenue growth is slowing, negative, or faces structural/cyclical headwinds.
- Specific risks include government budget cycles for defense and government contractors.
- Higher leverage for some names like LDOS.
Here are 4-6 that I think are worth digging into further. Not recommendations. Just research candidates.
Amdocs (DOX) $51.47, \~2.8% above 52-week low
Intrinsic value at \~$143/share, a 179% discount. FCF yield of 7.1%, ROIC 12.7%, debt/equity 0.32x. 6 consecutive years of positive FCF. The concern is recent revenue growth is slightly negative (3yr CAGR -0.3%). But EPS and operating income have compounded at solid mid-single digits. If the business can stabilize growth, the margin of safety looks wide.
EPAM Systems (EPAM) $76.64, \~2% above 52-week low
Down 65% from its high. DCF value \~$187/share (144% discount). FCF yield 5.4%, ROIC 9.8%, virtually no debt (D/E 0.08). Revenue growth has slowed to low single digits, but analysts expect EPS to grow 32% annualized over the next 3 years. The balance sheet is net cash. The question is whether the IT services slowdown is cyclical or structural.
Leidos (LDOS) $107.07, \~0.9% above 52-week low
A government IT/defense contractor. DCF value \~$474/share (343% discount). FCF yield 6.7%, ROIC 12.8%, debt/equity 1.39x. Revenue growth has been steady (6.9% 5yr CAGR), FCF 3yr CAGR 23.8%. Operating margin above 12%. Leverage is a bit higher but manageable. The main risk is government budget cycles. Still, 15% ROIC and a huge discount to intrinsic value make it interesting.
Maximus (MMS) $55.74, \~0.8% above 52-week low
Government services (health/human services). DCF value \~$175/share (213% discount). FCF yield 7%, ROIC 12.2%, debt/equity 0.86x. Revenue 5yr CAGR 9.4%, FCF 3yr CAGR 16.2%. FCF conversion is strong. Net debt/EBITDA 1.75x.
Stantec (STN) $67.69, \~2.6% above 52-week low
Engineering/construction. DCF value \~$143/share (112% discount). FCF yield 5.4%, ROIC 10.4%, debt/equity 0.77x. Revenue 5yr CAGR 17%, EPS 5yr CAGR 22%. FCF 3yr CAGR 51%. Leverage is moderate. The downside is that forward revenue estimates are flat. But the historical growth and cash flow conversion are strong.
Suburban Propane (SPH) $16.55, \~0.5% above 52-week low
This one screams value trap. DCF shows \~$45/share (171% discount), FCF yield 9.5%, ROIC 9.6%. But debt/equity is 2.22x, net debt/EBITDA 5.18x. FCF 3yr CAGR is -13.4%. Revenue is lumpy and recent growth negative. The high yield is tempting, but the leverage and declining cash flow demand careful scrutiny before stepping in.
Definitive Healthcare (DH) is also on the list (down 84%), but with negative ROIC and net losses, that’s a micro-cap turnaround story. High risk.
For me, DOX, EPAM, and LDOS seem like the most compelling combination of low price, decent quality metrics, and manageable debt.
Buy none. 4 of the mag 7 are discounted. Buy those as well as netflix
But that's not "value" investing.
Value investing is buying cheap stocks making new lows in a market making new highs, in an effort to "be right" rather than make money.
LOL, summed up the sub in one sentence. Some people love being poor, can't help them.
That’s not value investing. Value investing is buying good companies at a discount. That’s it.
So companies making billions, positive revenue, earrings and ebita. Good cash flows and pays dividends that have dropped by 10-20%?
Yes, I think it is a good company but be aware of the 8B in goodwill!
Any interest in CPRT Copart? I’m working on DD. Seems very interesting.
Buy value, don’t blindly the mag 7, they are not inherently superior
Rival Little League team was sponsored by suburban propane when I was a kid, we called suburban poop stain. That is all I have to contribute.
Inefficiency, bureaucracy, lack of mobility and mismanagement can spread at size as well… historically big companies that have rapidly grown have trouble maintaining that growth
This one looks poised for another leg down, but one i am watching
Check out FSLR, AU, ACN, CWCO (P/E on last one isn’t great at the moment but water is a future must have and the amount of cash to debt looks great).
That’s all I look for. I have a decent sized list even though my recent 3 buys all bit me on the ass right now.
I have a list too. What is stopping you from buying those stocks on your list?
What is stopping me from buying "value" stocks like NOW, CRM, INTU, ZS, MELI, NFLX and many others is that they are in downtrends.
For me, value investing is identifying potential opportunities but waiting for the market to show signs of agreement with the thesis before committing capital.
So what does it reward now? Hype?