3 Stocks Trading at a Discount

If you want to increase your likelihood to identify bargains, one way to do so is to screen the market for equities that are trading at a discount to their intrinsic value estimate as calculated from the projected free cash flow (FCF) valuation model.

Unlike the discounted cash flow or discounted earnings valuation models, the projected FCF model allows investors to estimate the value of those companies whose record of revenue and earnings is not regular and may also incorporate losses in some quarters. The projected FCF uses normalized free cash flow and book value.

The following stocks seem to be underestimated by the market according to the projected FCF model. They also have positive recommendation ratings among sell-side analysts on Wall Street.

Logan Ridge Finance Corp

The first company that matches the criteria is Logan Ridge Finance Corp (

LRFC, Financial), a Charlotte, North Carolina-based asset management firm specializing in senior and subordinated debt and loans as well as equity investments in sponsored companies.

The stock was trading at around $25.02 per share at close on Friday, which represents a discount to the projected free cash flow of $165.89 per share. The share price has risen by 177.4% over the past year for a market capitalization of $67.83 million and a 52-week range of $8.40 to $28.90.

GuruFocus has assigned a score of 3 out of 10 for the company’s financial strength rating and of 2 out of 10 for its profitability rating.

The stock has one recommendation rating of buy with a target price of $32 per share on Wall Street.

Medallion Financial Corp

The second stock that holds the criteria is Medallion Financial Corp (

MFIN, Financial), a New York City-based finance company providing various credit services to fund several commercial businesses, including taxi medallions, small-scale homes and existing business improvements.

The stock traded at around $8.29 per share at close on Friday, which represents a discount to the projected free cash flow of $24.38 per share. The price has risen 241.2% over the past year for a market capitalization of $207.76 million and a 52-week range of $2.31 to $9.50.

GuruFocus has assigned a score of 2 out of 10 for the company’s financial strength rating and of 4 out of 10 for its profitability rating.

On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $10.50 per share.

Civeo Corp

The third stock that qualifies is Civeo Corp. (

CVEO, Financial), a Houston-based provider of accommodations to workforces in the natural resource industry in North America and Australia.

The stock traded at around $22.68 per share at close on Friday, representing a discount to the projected free cash flow of $61.48. The share price has risen 204% over the past year for a market capitalization of $324.69 million and a 52-week range of $7.26 to $25.28.

GuruFocus has assigned a score of 3 out of 10 for both the company’s financial strength rating and its profitability rating.

On Wall Street, the stock has one recommendation rating of buy with a price target of $30.50 per share.