Regular readers of my columns know that I try to highlight stocks under $5 a share that I think are undervalued at least once a week. I have had a lot of success in my own portfolio with these selections and there are few better feelings in finding a underfollowed equity that becomes a home run. Here are two selections for this week that seem undervalued given their valuations and growth prospects.
Flow International Corporation (FLOW) is a small Pacific Northwest manufacturer that provides water jet cutting and surface preparing solutions.
4 reasons FLOW is too cheap at $3.50 a share:
The stock is more than 50% below the median analyst price target of $5.50 a share. Price targets range from $4.50 to $6 a share. The company has more than doubled its operating cash flow over the past three years and has a solid balance sheet with net cash on its books. FLOW sells for under 10 times forward earnings, a huge discount to its five year average (32.5). Analysts expect between 7% to 10% revenue growth in FY2012 and FY2013 and stocks sports a five year projected PEG of under 1 (.65).
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