5 Undervalued Stocks Trading Near Lows With Conservative Accounting Risk

Management makes many accounting decisions when reporting its company’s performance, and this can allow deviation from economic reality. To gauge how “real” the reported stats are, analysts look at these choices.

Forensic accounting firm Audit Integrity is a firm that analyzes and rates companies based on these choices. Its Accounting and Governance Risk (AGR) score ranges from 1-100, with 100 being the most conservative and reliable.

We ran a screen on stocks trading within 10% of their 52-week lows for those that Audit Integrity has rated as having conservative accounting and governance risk. We also searched for those stocks that appear undervalued relative to free cash flow, with P/FCF < 5.

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

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We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

List sorted by market cap.

1. Southwest Airlines Co. (LUV): Regional Airlines Industry. Market cap of $8.51B. The stock is trading 0.66% above its 52-week low. P/FCF at 4.92. According to Audit Integrity, the company has conservative accounting and governance risk, with an AGR score of 91. It's been a rough couple of days for the stock, losing 7.41% over the last week.

2. E*TRADE Financial Corporation (ETFC): Investment Brokerage - National Industry. Market cap of $2.86B. The stock is trading 5.88% above its 52-week low. P/FCF at 2.08. According to Audit Integrity, the company has conservative accounting and governance risk, with an AGR score of 89. This is a risky stock that is significantly more volatile than the overall market (beta = 2.08). The stock is currently stuck in a downtrend, trading 5.44% below its SMA20, 11.59% below its SMA50, and 16.08% below its SMA200.

3. Aspen Insurance Holdings Ltd. (AHL): Property & Casualty Insurance Industry. Market cap of $1.87B. The stock is trading 6.96% above its 52-week low. P/FCF at 3.19. According to Audit Integrity, the company has conservative accounting and governance risk, with an AGR score of 95. The stock has gained 2.32% over the last year.

4. Susquehanna Bancshares, Inc. (SUSQ): Regional Banks Industry. Market cap of $1.02B. The stock is trading 6.92% above its 52-week low. P/FCF at 2.74. According to Audit Integrity, the company has conservative accounting and governance risk, with an AGR score of 88. The stock is a short squeeze candidate, with a short float at 11.33% (equivalent to 12.44 days of average volume). The stock has lost 11.97% over the last year.

5. Glacier Bancorp Inc. (GBCI): Regional Banks Industry. Market cap of $938.56M. The stock is trading 4.36% above its 52-week low. P/FCF at 2.93. According to Audit Integrity, the company has conservative accounting and governance risk, with an AGR score of 98. The stock is a short squeeze candidate, with a short float at 9.06% (equivalent to 16.49 days of average volume). The stock has lost 10.49% over the last year.

AGR scores sourced from Audit Integrity; all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.