Most Undervalued S&P 500
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⚠️ This is an automated screen, not financial advice or a recommendation. It shows where a base-case DCF (or DDM for banks/insurers) valuation sits above the current price. For non-bank financial companies (exchanges, asset managers, payment networks), reported free cash flow is normalised downward — matching the same adjustment the DCF tool applies. DCF is highly sensitive to assumptions — see the method note below. This is purely quantitative: it does not read news, judge management quality, or weigh competitive position, litigation, or recent events. Always do your own research.
How a stock makes this list
Every S&P 500 company is run through the base-case engine, then must clear all five rules below. The list is capped at 20 — so a strict month can show fewer.
- Undervalued — base-case intrinsic value is above the current price (positive margin of safety). Most large caps trade above their conservative base case and are screened out here.
- Valuable by the model — produced a real intrinsic value. Companies with no/negative free cash flow, with net debt exceeding firm value, or banks/insurers paying no dividend can't be valued and are dropped.
- Real cash flow — free cash flow came from a reported figure or operating cash flow minus capital expenditure. The rough OCF × 0.8 proxy is excluded because it fakes undervaluation.
- Normalised for financials — for non-bank financial companies (exchanges, asset managers, payment networks), reported free cash flow overstates owner earnings. The screen applies the same normalisation as the DCF tool — reducing reported FCF before valuation — so fair values match what you'd see entering those tickers manually.
- Plausible margin — margin of safety is 80% or less. When the model says a stock is worth far more than double its price, that usually reflects one-off-inflated or cyclically-peaked cash flow (e.g. a miner or contractor at the top of its cycle), not a genuine bargain — so those are excluded.
Want to value a different stock? Open the DCF Valuation tool →
| # | Stock | Sector | Mkt cap | Method | Fair value | Analyst tgt | Live price | Since listed | Margin (live) | WACC/Re | TV % | Op margin | P/E | First seen |
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About this screen
Each month we run every S&P 500 company through the same base-case engine as the DCF Valuation tool: a five-year cash-flow projection, 2.5% terminal growth, and a WACC derived from market data. Banks and insurers — where DCF doesn't work — are valued with a Dividend Discount Model instead and labelled DDM.
We rank by margin of safety (how far intrinsic value sits above price) and show the top 20. Stocks with unreliable cash-flow data, no positive cash flow, or implausibly large margins are filtered out, because those are usually data artifacts rather than bargains. For non-bank financials (exchanges, asset managers, payment networks) we apply the same free cash flow normalisation as the DCF tool, so the screen's fair values match what you'd get entering those tickers manually.
Frequently asked questions
Is this a buy list?
No. It's a starting point for research. A DCF says what a stock is worth if a set of assumptions hold — and small changes in those assumptions move the answer a lot. Treat it as a screen, not advice.
How often is it updated?
Roughly monthly. The "as at" date at the top shows when the snapshot was taken. The current price shown updates live each time you open the page.
Why are some stocks valued with DDM?
Banks and insurers have cash flows (deposits, reserves) that aren't owner earnings, so DCF overstates them. For those we use a Dividend Discount Model and label the row DDM.
Does it consider news, management, or competition?
No. This is a purely quantitative screen built from reported financial data. It does not read news, assess management quality, brand strength, competitive position, regulatory or litigation risk, or any recent events. A stock can look cheap here while facing real problems the numbers don't yet show — which is exactly why this is a starting point for research, not a verdict.
What does "first seen" mean?
The date a stock first entered this list and its price then. It's shown for transparency — it is not a performance or return claim.