The 11 best undervalued quality stocks in June 2026

2026-06-16 · By Lubin Danilo, founder of Lubin Investment

In June 2026, 11 stocks earn the top score in my screener and trade at low valuations for their quality level: RNR, UVE, MCY, ACGL, KNSL, PGR, CINF in insurance, plus AFYA (Brazilian education), KGC (gold), HAE (medical devices) and BKNG (online travel). Here is my method and these 11 cases.

• 11 stocks pass all 10 quality criteria AND trade at low valuations in June 2026.
• Insurance dominates with 7 of the 11 names: a sign that the market is particularly cautious on that sector.
• AFYA (Brazilian education) is the lowest-valued stock on the list: 1.1 times its annual cash.
• Top quality does not mean zero risk: every discount has a reason. I explain it for each case.
• This list changes every month as prices and results shift. It is never static.

My method: quality first, price second

I always judge business quality separately from price. They are two different questions and many investors confuse them. A fantastic company bought at too high a price is still a bad investment. A mediocre company at a bargain price is still mediocre.

My screener assigns a score out of 10 to each stock by evaluating 10 objective financial criteria. Profitability (does the company make money?), revenue and cash growth over 5 years, return on invested capital (what I call Cash ROCE: for every 100 dollars of capital, how much cash does the company generate?), debt control, share buybacks (a sign management believes in the company), and margin expansion. A score of 10/10 means every criterion passes. That is not trivial: most listed stocks do not achieve it.

Once quality is confirmed, I look at valuation through the P/FCF (price-to-free-cash-flow): the stock price divided by the cash the company truly generates each year after all expenses. A P/FCF of 5 means you are paying today five years' worth of that cash. The lower it is, the cheaper the stock. This ranking groups the 10/10 stocks whose P/FCF remains below a threshold I consider reasonable.

The 11 stocks of June 2026

Here is the full list, sorted by ascending P/FCF. Cash ROCE shows return on capital: the higher it is, the more value the company creates from the capital it employs.

• AFYA (Brazil education): P/FCF 1.1x, Cash ROCE 19.8%, FCF margin 31.6%, revenue growth 16.7%/yr
• RenaissanceRe (RNR, reinsurance): P/FCF 3.0x, Cash ROCE 30.6%, FCF margin 36.5%, growth 27.9%/yr
• Universal Insurance (UVE, insurance): P/FCF 3.1x, Cash ROCE 50.3%, FCF margin 21.5%
• Mercury General (MCY, insurance): P/FCF 3.9x, Cash ROCE 55.7%, FCF margin 23.1%
• Arch Capital (ACGL, reinsurance): P/FCF 5.8x, Cash ROCE 24.2%, FCF margin 28.8%
• Kinsale Capital (KNSL, insurance): P/FCF 7.2x, Cash ROCE 45.4%, FCF margin 51.9%
• Progressive (PGR, insurance): P/FCF 7.4x, Cash ROCE 40.3%, FCF margin 18.1%
• Cincinnati Financial (CINF, insurance): P/FCF 7.7x, Cash ROCE 21.9%, FCF margin 26.6%
• Kinross Gold (KGC, gold): P/FCF 13.2x, Cash ROCE 27.3%, FCF margin 36.4%, revenue growth 26.8%/yr
• Haemonetics (HAE, medical devices): P/FCF 13.3x, Cash ROCE 24.7%, FCF margin 21.0%
• Booking Holdings (BKNG, online travel): P/FCF 16.6x, Cash ROCE 161.6%, FCF margin 30.4%

Why these stocks are discounted: the real reasons

A discount always has a reason. It can be justified (the business is genuinely deteriorating) or exaggerated (market fear exceeds reality). My job is to distinguish the two.

Insurance occupies 7 of the 11 spots because the market anticipates two risks: rising climate catastrophes (hurricanes, wildfires, floods costing insurers more and more), and accounting complexity that discourages analysis. That is not irrational. But quality insurers have shown their ability to adjust premiums. Progressive is the example: revenue growth of 18% a year over five years with recognised underwriting discipline.

AFYA (Brazilian medical education) trades at a P/FCF of 1.1 times. At that price, you are paying just over one year of generated cash. The discount reflects Brazil risk (monetary policy, healthcare reform) and currency risk for a euro or dollar investor. Yet the business is solid: FCF margin of 31.6%, Cash ROCE of 19.8%, revenue growth of 16.7% a year. The market is panicking about geography, not about fundamentals.

Booking Holdings (BKNG) is the most expensive name on this list at 16.6 times its annual cash. But for a company showing a Cash ROCE of 161.6% (extraordinary: for every 100 dollars of capital, it generates 161 dollars in cash), and that buys back its own shares at 5.9% a year, that is still reasonable. The market fears a global tourism slowdown and Airbnb competition. Those risks exist. But Booking's dominant position (roughly 45% of global online travel bookings) is a moat, a competitive advantage, that is very hard to overcome.

Risks not to ignore

I come back to this because it matters. A low P/FCF is never a guarantee. It only works if quality holds over time. Three structural risks on this list deserve naming.

Geographic risk for AFYA and MCY: heavy exposure to one region (Brazil for AFYA, California for Mercury) can turn an exceptional quarter into a sharp loss if the political or climatic context deteriorates. Haemonetics (HAE) carries high debt at 3.54 times its annual cash, above my usual threshold. That is a real watch point even if margins and growth partially compensate.

KGC (Kinross Gold) is a gold miner. The gold price can move sharply. If gold falls 20%, Kinross's free cash flow falls much more than 20%: mines have high fixed costs. The P/FCF of 13.2 times is reasonable today, but it can become high very quickly if gold corrects.

This ranking, every month

This list is not static. Prices move, quarterly results change scores. A stock at 8/10 can move to 10/10 after strong results. Another may drop out if its P/FCF rises too high. That is why I built my screener: to have this view in real time. You can filter by sector, score, P/FCF, and see detailed profiles for each stock with all 10 criteria evaluated one by one.

FAQ

How many 10/10 stocks are there in the screener overall?

The number varies with markets and quarters. In June 2026, around twenty stocks earn the top score. This undervalued ranking isolates those whose valuation (P/FCF) is still low relative to their quality.

Why so many insurers on this list?

The insurance sector is particularly avoided by individual investors, which creates discounts. On top of that, climate catastrophe uncertainty pushes the market to be more cautious on valuations. This creates an anomaly: exceptional quality companies at low prices.

How is the P/FCF calculated?

P/FCF (price-to-free-cash-flow) = stock price divided by free cash flow per share. Free cash flow is the cash the company truly generates after paying operating expenses and investments. It is the hardest metric to manipulate, so the most reliable for judging whether a stock is cheap or expensive.

AFYA at 1.1 times annual cash: is that a market mistake?

Not necessarily a mistake, but possibly an overreaction. The business is solid and margins are high. The market is pricing in high Brazil risk and currency risk. If those risks materialise, the discount is justified. If the business continues on its trajectory, it is an opportunity. That is the trade-off to analyse yourself.

Is this list enough to decide to buy?

No. It is a starting filter. Each stock requires deeper analysis: reading annual reports, understanding the business model, estimating a reasonable buy price, assessing your own risk tolerance. This is not investment advice.

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About the author

Written by Lubin Danilo, founder of Lubin Investment. A self-taught individual investor, I have analyzed stocks through their fundamentals for several years and invest my own money with this method. I codified it into a tool that judges a company's quality and its price separately, using criteria drawn from the financial literature (Warren Buffett, Michael Mauboussin, Aswath Damodaran).