We are continuing our series of suggesting several companies for further study. The companies listed below share several characteristics: the generate meaningful free cash flows which we consider very important, they are very profitable as measured by return on equity and they appear to be undervalued when the Enterprise to EBITDA metric is used. These companies also share one additional characteristic. Namely, they are recognized by the market and trade at or near their fifty-two week highs. Each of these companies has had a big run-up in share price. We need to ask if this run will continue. For this reason, we look at these companies as trading opportunities and not long term investments. They need to be monitored closely for changes in sentiment and underlying fundamentals.
Disclosure: The author has a long position in XOM.