Value Research · Undervalued

Undervalued Stocks: Trading Below Fair Value Right Now

We run a Discounted Cash Flow model on every stock using real SEC EDGAR data. These are the ones trading below our estimated fair value — with a positive margin of safety.

What Makes a Stock Truly Undervalued?

A stock is undervalued when its market price is lower than what the underlying business is actually worth. The challenge is figuring out what "actually worth" means — that's where Discounted Cash Flow analysis comes in.

Our approach is straightforward:

  1. Start with real cash flows. We pull historical free cash flow directly from SEC EDGAR. No estimates, no analyst projections — just what the company actually generated.
  2. Project conservatively. We use the median historical growth rate, capped at 20%, to avoid fantasy projections.
  3. Discount at a risk-appropriate rate. Our WACC (Weighted Average Cost of Capital) starts at 10% and increases for more volatile or leveraged companies.
  4. Show you the math. Every ticker page includes the full assumptions table and a sensitivity analysis so you can plug in your own numbers.

Why Margin of Safety Matters

The concept of "margin of safety" was introduced by Benjamin Graham in The Intelligent Investor. The idea is simple: since any valuation model involves assumptions that could be wrong, you want a buffer between the price you pay and the value you estimate.

If our model says a stock is worth $50 and it trades at $35, that's a 30% margin of safety. If we're wrong about the growth rate by a few percentage points, you still bought at a reasonable price. If we're right, you got a bargain.

Margin of safety protects you from:

  • Model error — DCF is only as good as its assumptions
  • Unexpected events — pandemics, regulatory changes, competitive disruption
  • Reversion to the mean — companies with temporarily high growth rates eventually slow down

How to Use This Page

The stock cards below are sorted by margin of safety. Each one shows:

  • The current market price vs. our DCF intrinsic value
  • The margin of safety percentage
  • The Z-Score (so you can see if "cheap" means "value" or "distress")
  • The moat rating (so you can see if the business has staying power)

Click any card to see the full DCF model, sensitivity table, and free cash flow history.

Matching stocks

Stocks that meet this criteria

View all stocks →
ACN $195.06

Accenture plc

Z-Score 3.57
Fair Value $294.48
Moat ★★★½☆
Div Safety A
Safe Zone MoS: 33.8%
DAL $71.21

Delta Air Lines, Inc.

Z-Score 1.30
Fair Value $130.11
Moat ★★☆☆☆
Div Safety B
High Risk MoS: 45.3%
INTC $65.70

Intel Corporation

Z-Score 1.71
Fair Value $79.94
Moat ★★½☆☆
Div Safety N/A
Caution MoS: 17.8%
MO $64.61

Altria Group, Inc.

Z-Score 4.78
Fair Value $90.11
Moat ★★★★☆
Div Safety C
Safe Zone MoS: 28.3%
VTRS $14.87

Viatris Inc.

Z-Score 1.11
Fair Value $41.00
Moat ★★½☆☆
Div Safety D
Caution MoS: 63.7%
FAQ

Common questions

How do you determine if a stock is undervalued?

We use a two-stage Discounted Cash Flow model. We take the company's historical free cash flow from SEC EDGAR filings, project it forward at the median growth rate for 10 years, then add a terminal value at 2.5% perpetual growth. The sum, discounted at a risk-adjusted WACC, gives us the intrinsic value per share. If the market price is below that number, the stock has a positive margin of safety.

What margin of safety should I look for?

Benjamin Graham recommended at least 33%. Warren Buffett typically looks for 25% or more. Our screener flags stocks with margin of safety above 10%, but the threshold should increase with the company's risk level. A high-risk company needs a larger margin of safety than a blue-chip.

Can a stock be undervalued and still be a bad investment?

Absolutely. A stock can appear cheap on a DCF basis but still be a value trap if the business is in structural decline. That's why we pair the DCF with the Altman Z-Score (bankruptcy risk) and Moat Rating (competitive durability). A stock that's undervalued with a high Z-Score and strong moat is much more interesting than one that's cheap because the business is failing.

How often does the fair value estimate change?

Intrinsic value recalculates whenever a new 10-K or 10-Q filing hits SEC EDGAR — roughly quarterly. The stock price updates daily. So the margin of safety fluctuates primarily with price movements between filing dates.

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