Most Undervalued Stocks Among Mega Cap Companies

How to find undervalued stocks?
We at Eyestock solve this problem simply and effectively. Using historical price-to-earnings ratio analysis, we quickly find what P/E level the median value is over the last 5 years. We get fair value by multiplying it by earnings per share (EPS) for 12 months. This method, called historical relative valuation, has proven extremely effective as a tool for finding entry points.

However, we are convinced that entry points and upside analysis should be sought only after a thorough stock fundamental analysis and the search for the most viable ideas. We have made our picks of the 10 best mega-cap stocks that have the highest Eyestock Rating after analyzing 10 key fundamentals such as ROE, Net Profit Margin and others. You can find out about the methodology here.

#10. Accenture (ACN)
-Eyestock Rating 105% (5% better than an ideal company to invest in by our methodology)
-Undervalued by 7% as of 24 May

We did a detailed analysis of the technology giant from Ireland in our article Creating Value Investing in Technology, Cloud, Data and AI with Accenture. In short, this is a strong business with an uncertain future outlook, which is what caused the share price to decline. For long-term investors, this could be a great opportunity for undervalued stock to buy.

#9. Automatic Data Processing (ADP)
Eyestock Rating 123% (23% higher threshold)
Undervalued by 8% as of 24 May

Despite belonging to the Industrial sector, the company’s business is similar to that of Accenture. ADP is a provider of software and services for human capital management. The company’s business is characterized by a fantastic ROE of 96% and ROIC of 52%. It is also worth highlighting the high indicators of sustainable development. The average earnings growth rate over 5 years is 12% with a deviation of 11%. To assess the sustainability of development, we look at the ratio of these two parameters, and if it is above 1, then we consider the company to be extremely sustainable.

#8. Paychex (PAYX)
Eyestock Rating 128% (28% better than threshold)
Undervalued by 9% as of 24 May

Paychex is another company that is involved in the provision of human capital management solutions for payroll, human resources, insurance and retirement for small and medium-sized businesses.
An excellently balanced business in all areas with annual revenues of more than $5.21B and a net profit margin of 32%. Please note that the company share`s price is not just undervalued, but has found support on the green line. This price level means that the company’s capitalization relative to net profit is minimal over the 5 years. PAYX stock has a minimum P/E of 25 and this level has served as an excellent buying opportunity for the most conservative investors. However, as long as the share price is below the fair value level (yellow one), the company is still undervalued.

#7. Adobe (ADBE)
Eyestock Rating 106% (6% above the benchmark)
Undervalued by 11% as of 24 May

Having one of the highest Gross Margin at 88% and a high level of earnings quality, the company has one of the strongest financial performance scores even despite the $1B fine for refusing to take over Figma.
Just look at how the red line works on the ADBE stock price chart — the level responsible for the maximum relative valuation of the company and a signal to sell shares. Today, investors have an excellent opportunity to buy undervalued shares with a potential of up to a maximum value of +21%.

#6. EOG Resources (EOG)
Eyestock Rating 104% (4% above the threshold)
undervalued by 15% as of 24 May

Quite unexpectedly, in our top there is a company that is engaged in the exploration, development, production and marketing of crude oil and natural gas. EOG Resources has simply amazing financial indicators for its industry:
-Net Profit Margin is +30%
-ROIC is +21%
-Cash Flow-to-Debt ratios is 2.89
With such outstanding business indicators, the company’s market capitalization is equal to 10 annual net earnings. The minimum historical P/E of EOG stock is 8.8. So we are really dealing with a high-quality and undervalued asset with growth potential in the most positive scenario of more than 100%.

If you want to know the five most undervalued stocks among mega cap companies, just unlock the stock picks by signing up FOR FREE.

Another option is using Free Stock Screener to find out the best profitable, best solvency, best undervalued or most overvalued stocks according to your choice.

Invest Smart, Grow Fast with Eyestock’s Ratings and Valuations