Wednesday, February 9, 2011

5 Deeply Undervalued Stocks Seeing Short Covering

Kapitall submits:

The following is a list of undervalued stocks, with Price to Free Cash Flow (P/FCF) ratios below 5. In other words, free cash flows makes up more than 20% of each company's market capitalization. Additionally, all of these stocks have seen a significant decrease in shares shorted between 10/15/2010 - 1/14/2011.

Short sellers seem to think the upside potential outweighs the downside potential of these names, as a result this list might offer an interesting starting point to a value-oriented investor--what do you think? Full details below.

Short trends data sourced from AOL Money and P/FCF ratios sourced from Finviz.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research. Note: The numbers on top of items represent the forward P/E ratio, if available.

The list has been sorted by the change in shares shorted over the last three months. (A reminder: All trends described occur between 10/15/2010 - 1/14/2011)

1. Cloud Peak Energy Inc. (CLD): Industrial Metals & Minerals Industry. Market cap of $750.17M.

P/FCF ratio at 3.06. Shorted shares decreased from 2.97M to 1.82M over the last three months (-39% change). Short float at 5.85%, which implies a short ratio of 1.41 days. The stock has gained 68.77% over the last year.

Other Highlights:

- Institutional and mutual fund investors have been net purchasers of the company's shares over the last two quarters, suggesting that


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