2026-09-01Screening report
Data as of 2026-09-01US market
Summary
September 2026 screening highlights severe valuation dislocations in high-FCF compounders including PayPal, CVS Health, Autodesk, Adobe, and Alphabet.
Screening weights
Fundamental improvement30%
Candidate comparison
| Rank | Ticker | Sector | 3M return | Revenue YoY | OPM Δ | FCF | Score |
|---|
| 1 | PayPal Holdings, Inc. | Fintech / Digital Payments | -12.5% | +10.0% | +1.2%p | TTM FCF $5.8B (+179% YoY Q2) | 88.0 |
| 2 | CVS Health Corporation | Healthcare Services / Pharmacy | -5.8% | +7.3% | +1.0%p | FY26 CFFO >=$11.5B (TTM FCF $8.3B) | 85.0 |
| 3 | Autodesk, Inc. | Enterprise Software / Design | -4.2% | +16.0% | +2.0%p | FY27 FCF $2.74B (Q2 FCF $561M) | 84.0 |
| 4 | Adobe Inc. | Enterprise Software / Creative Cloud | -11.8% | +13.0% | +1.2%p | TTM FCF $9.0B (Q2 FCF $2.05B) | 83.0 |
| 5 | Alphabet Inc. | Technology / Ads & Cloud | -14.8% | +24.2% | +2.0%p | TTM FCF $68.2B | 82.0 |
| 6 | The Walt Disney Company | Entertainment / Streaming | -2.1% | +7.0% | +1.9%p | Q3 FCF $3.1B (+63% YoY) | 81.5 |
| 7 | Medtronic plc | Healthcare / Medical Devices | -0.7% | +13.7% | +0.1%p | TTM FCF $5.2B | 80.0 |
| 8 | United Parcel Service | Industrials / Logistics | -2.0% | +6.5% | +0.6%p | TTM FCF $4.8B | 78.5 |
| 9 | Target Corporation | Consumer Discretionary / Retail | +9.2% | +5.3% | +0.7%p | TTM FCF $4.1B | 77.0 |
| 10 | Salesforce, Inc. | Enterprise Cloud / CRM | +9.5% | +11.2% | +1.6%p | TTM FCF $12.8B | 76.5 |
| 11 | Cisco Systems, Inc. | Technology / Networking & Cyber | +12.5% | +18.0% | +2.4%p | FY26 FCF $16.8B | 75.5 |
| 12 | RTX Corporation | Aerospace & Defense | +17.2% | +14.0% | +1.1%p | FY26 FCF $8.6B | 73.0 |
Screened names (observations)
Observation
Extremely mispriced at ~9.5x forward P/E despite +10% revenue growth, +179% Q2 FCF surge, and high-ROI share retirements of >7% annually with $4.2B net cash.
Catalysts to watch
- Fastlane guest checkout commercial adoption across major platforms
- Venmo debit card monetization scaling
- $5.0B-$6.0B annual share repurchases
Risks
- Competition from Apple Pay on mobile checkout
- Unbranded Braintree margin mix drag
Framework exit signals
- Transaction margin dollar growth turning negative for two consecutive quarters
- Branded checkout TPV growth decelerates below +2.0% YoY
Metrics to watch
- Branded checkout TPV YoY growth
- Transaction margin dollar growth rate
- Fastlane merchant adoption
Observation
Underwriting turnaround confirmed with Medical Benefit Ratio improving 250 bps YoY to 87.4%, full-year guidance raised to $7.90-$8.10 EPS, trading at 11.7x P/E with 2.8% yield.
Catalysts to watch
- Medicare Advantage margin normalization into FY2027
- Aetna Claims Assist generative AI workflow deployment
- MinuteClinic GLP-1 Bridge program expansion
Risks
- Potential medical utilization spikes in H2 2026
- PBM regulatory scrutiny on rebate models
Framework exit signals
- Medical Benefit Ratio reverting above 89.5% for two consecutive quarters
- Caremark adjusted operating margin compressing by >100 bps YoY
Metrics to watch
- Medical Benefit Ratio (MBR)
- Health Care Benefits Adjusted Operating Income
- Total Medical Membership retention
Observation
Mission-critical monopoly across design and engineering software with 90%+ gross margins, 41% operating margins, and net cash balance sheet, trading at ~20.6x forward P/E (28% historical discount).
Catalysts to watch
- Global completion of direct agency New Transaction Model
- Monetization of generative AI design agents across Forma, Fusion, Revit
- MaintainX integration cross-selling operational workflows
Risks
- Sales cycle disruption during channel transition
- Macro softness in commercial construction starts
Framework exit signals
- Billings growth falling below +5.0% YoY
- cRPO constant-currency growth falling below +6.0% YoY
Metrics to watch
- cRPO constant-currency growth rate
- Billings growth
- Free cash flow conversion
Observation
Priced at an extreme discount (~17.8x forward P/E vs 32x historical average) due to misplaced AI disruption fears, while AI-first ARR tripled to >$500M and operating margin reached 44.6%.
Catalysts to watch
- Firefly Services enterprise consumption acceleration
- Acrobat AI Assistant paid seat expansion
- Semrush digital marketing and SEO integration
Risks
- Competition in entry-level design from freemium tools (Canva)
- Leadership transition execution
Framework exit signals
- Digital Media Net New ARR growth decelerating below +7.0% YoY
- Non-GAAP operating margin falling below 40.0%
Metrics to watch
- AI-first ARR growth rate
- Digital Media Net New ARR
- Non-GAAP operating margin stability
Observation
Mega-cap valuation dislocation at ~16.2x forward P/E with +24% revenue growth, +82% Google Cloud acceleration, and $129.3B net cash reserves.
Catalysts to watch
- Antitrust regulatory resolution without structural breakup
- Gemini OS native AI integration across Android/Workspace
- Cloud margin expansion from custom TPU silicon efficiency
Risks
- DOJ antitrust remedies impacting default search agreements
- AI CapEx depreciation drag
Framework exit signals
- Search & Other ad revenue growth slowing below +4.0% YoY
- Google Cloud operating margin turning negative
Metrics to watch
- Google Cloud revenue growth and margin
- Search advertising revenue growth
- Post-peak CapEx FCF normalization
September 2026 Equity Research Report: Top 5 Undervalued U.S. Stocks With Improving Fundamentals (Edition 2)
1. Executive Summary
- Data Reference Date: September 1, 2026
- Total Candidates Screened: 12 U.S. Large-Cap Equities (S&P 500 / Russell 2000)
- Market Environment Overview: U.S. equities show pronounced divergence between underlying operational earnings power and headline multiples. Enterprise software and high-FCF platforms with expanding margins (%p) offer historically rare valuation entry points.
- Selection Criteria: Underperforming 3M share price returns, accelerating quarterly revenue/OPM, manageable leverage, and tangible catalysts over a 6 to 18-month horizon.
2. Candidate Comparison Table
- PYPL (Score: 88.0) - Fintech / Payments | Return 3M: -12.5% | Rev Growth: +10.0% | OPM Chg: +1.2%p | FCF: TTM $5.8B
- CVS (Score: 85.0) - Healthcare Services | Return 3M: -5.8% | Rev Growth: +7.3% | OPM Chg: +1.0%p | FCF: FY26 >=$11.5B
- ADSK (Score: 84.0) - Enterprise Software | Return 3M: -4.2% | Rev Growth: +16.0% | OPM Chg: +2.0%p | FCF: FY27 $2.74B
- ADBE (Score: 83.0) - Creative Software | Return 3M: -11.8% | Rev Growth: +13.0% | OPM Chg: +1.2%p | FCF: TTM $9.0B
- GOOGL (Score: 82.0) - Technology / Cloud | Return 3M: -14.8% | Rev Growth: +24.2% | OPM Chg: +2.0%p | FCF: TTM $68.2B
- DIS (Score: 81.5) - Entertainment / Streaming
- MDT (Score: 80.0) - Healthcare / Medical Devices
- UPS (Score: 78.5) - Industrials / Logistics
- TGT (Score: 77.0) - Consumer Discretionary / Retail
- CRM (Score: 76.5) - Enterprise Cloud / SaaS
- CSCO (Score: 75.5) - Technology / Networking
- RTX (Score: 73.0) - Aerospace & Defense
3. Final Top 5 Recommendations
- PYPL (PayPal Holdings, Inc.) — Score: 8.8 / 10 | Forward P/E ~9.5x | FCF +179% YoY | >7% annual share retirements.
- CVS (CVS Health Corporation) — Score: 8.5 / 10 | Forward P/E 11.7x | MBR improved 250 bps to 87.4% | FY26 guidance raised.
- ADSK (Autodesk, Inc.) — Score: 8.4 / 10 | Forward P/E 20.6x | 41% Non-GAAP OPM | Net cash monopoly software.
- ADBE (Adobe Inc.) — Score: 8.3 / 10 | Forward P/E 17.8x | AI-first ARR >$500M | 44.6% Non-GAAP OPM.
- GOOGL (Alphabet Inc.) — Score: 8.2 / 10 | Forward P/E 16.2x | Cloud +82% YoY | $129.3B net cash reserves.
4. Conclusion
- Highest Conviction Pick: PYPL (PayPal Holdings)
- Best Risk/Reward: CVS (CVS Health Corporation)
- Most Defensive Pick: ADSK (Autodesk, Inc.)
- Top Creative AI Compounder: ADBE (Adobe Inc.)
- Highest Rebound Potential: GOOGL (Alphabet Inc.)
Not investment advice. Scores and lists are relative snapshots.
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