Value Ideas: Smart Money Stock Picks Deeply Undervalued by Target Price

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Do you consider yourself a value investor? If you like to look for stocks that you believe are trading below their fair value, your answer might be yes.

With value investing in mind, we ran a screen on potentially undervalued stocks. We began by screening for smart money stock picks: stocks that have seen buying attention from institutional investors over the current quarter, as well as from company insiders over the last six months.

We then screened for those that appear undervalued to target price, trading at steep discounts to even their lowest (most pessimistic) target prices. We considered the lowest target price because target prices are known to be inflated. We also only considered companies with sufficient analyst coverage, with five or more analyst target prices.

Business section: Investing ideas
Below is the final list of stocks from this screen. These stocks have the backing of smart money investors (both institutional investors and insiders), and also appear undervalued relative to target price.

Do you think these names should be trading higher? Use this list as a starting point for your own analysis. (Click here to access free, interactive tools to analyze these ideas.)

1. American Equity Investment Life Holding (NYS: AEL) : Underwrites fixed annuity and life insurance products in the United States and the District of Columbia. Of the six analysts that have set a target price on the stock, the lowest price target stands at $14.50. This implies a current upside of 17.22% from current levels around $12.37. Net institutional purchases in the current quarter at 3.8M shares, which represents about 6.77% of the company's float of 56.15M shares. Over the last six months, insiders were net buyers of 20,689 shares, which represents about 0.04% of the company's 56.15M share float.

2. Och-Ziff Capital Management Group (NYS: OZM) : A publicly owned investment manager. Of the nine analysts that have set a target price on the stock, the lowest price target stands at $11.00. This implies a current upside of 16.53% from current levels around $9.44. Net institutional purchases in the current quarter at 27.6M shares, which represents about 27.74% of the company's float of 99.48M shares. Over the last six months, insiders were net buyers of 702,389 shares, which represents about 0.71% of the company's 99.48M share float.

3. ZIOPHARM Oncology (NAS: ZIOP) : Focuses on the development and commercialization of in-licensed cancer drugs in North America. Of the five analysts that have set a target price on the stock, the lowest price target stands at $6.00. This implies a current upside of 16.50% from current levels around $5.15. Net institutional purchases in the current quarter at 11.5M shares, which represents about 25.04% of the company's float of 45.93M shares. Over the last six months, insiders were net buyers of 1,351,460 shares, which represents about 2.94% of the company's 45.93M share float.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.


Kapitall's Alexander Crawford does not own any of the shares mentioned above. Target price and insider data sourced from Yahoo! Finance, institutional data sourced from Fidelity.

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