Undervalued gems

Screening Filters

1. Market Cap ≥ $2,000,000,000

   • Purpose: Focus on established, mid‑ to large‑cap companies.
   • Rationale:
     • Larger firms typically have more stable financials and better disclosure, which makes valuation metrics (like P/E and P/B) more reliable.
     • This avoids ultra‑small or microcaps, which can appear “cheap” on paper but are often illiquid, risky, or opaque.

2. Monthly Average Dollar Volume ≥ $300,000

   • Purpose: Ensure minimum liquidity.
   • Rationale:
     • Liquidity reduces transaction costs (slippage, wide bid‑ask spreads) and the risk of being unable to enter/exit positions.
     • For an “undervalued” idea to be practical, you must be able to trade it reasonably easily.

3. Region: United States

   • Purpose: Restrict search to U.S. companies.
   • Rationale:
     • Directly matches your request for undervalued stocks “in the US market.”
     • Ensures a consistent regulatory, accounting, and macroeconomic environment when comparing valuations.

4. Exchange: NYSE (XNYS), Nasdaq (XNAS), AMEX (XASE)

   • Purpose: Limit results to major U.S. exchanges.
   • Rationale:
     • These venues host the bulk of well‑followed, better‑regulated U.S. listings.
     • Reduces exposure to over‑the‑counter or obscure listings that might look cheap but carry significant governance or liquidity risks.

5. P/E (Trailing Twelve Months) between 3 and 18

   • Purpose: Identify stocks trading at relatively low earnings multiples, but not “distress‑level” or nonsensical levels.
   • Rationale:
     • A cap at 18 focuses on companies valued at a discount vs. many market segments (often trading at higher P/Es), supporting the “undervalued” theme.
     • A floor at 3 filters out extremely low P/Es that might signal serious problems, one‑off earnings distortions, or data issues rather than genuine value.

6. Price‑to‑Book (P/B) between 0.3 and 2

   • Purpose: Look for stocks trading near or below the value of their net assets, but again avoid extreme outliers.
   • Rationale:
     • A P/B ≤ 2 is often associated with value or asset‑backed investing, implying the stock price is not excessively above its book value.
     • A floor of 0.3 excludes ultra‑low P/B names that can indicate structural decline, accounting red flags, or near‑liquidation scenarios; this maintains some quality control.

7. Target Price Upside Potential: “MoreAbovePrice”

   • Purpose: Require that analysts’ consensus target prices are above the current share price.
   • Rationale:
     • If several analysts believe fair value is higher than today’s price, that supports the idea the stock may be undervalued.
     • This combines quantitative valuation (P/E, P/B) with the market’s forward‑looking assessments (analyst targets), adding another layer of “undervaluation” signal.

Why Results Match Your Request

• The valuation metrics (P/E and P/B) directly target companies priced below typical market multiples and not excessively above their asset values, consistent with “undervalued” criteria.
• The analyst target‑price filter adds a forward‑looking confirmation that professionals, on average, see upside relative to current prices.
• Liquidity, size, region, and exchange filters ensure that the “undervalued” ideas are in mainstream, tradable U.S. stocks rather than illiquid or highly speculative names.