Wall Street: 4 Quality Stocks at Their Lowest Valuation Ever

2026-10-02 · By Lubin Danilo, founder of Lubin Investment

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Four high-quality Wall Street stocks trade near the bottom of their own price history: Intuit, MercadoLibre, Mercury General and Chipotle. But a low price for itself is not a low price in absolute terms: Mercury General trades at 3.9 times its cash flow, Chipotle at 29.6 times.

What does “at the bottom of its history” mean?

My grid scores a business on ten quality criteria (margins, cash flow per share growth, debt, return on capital), separately from price. For price I use P/FCF: the share price divided by the cash the company really generates once its bills are paid. A P/FCF of 14 means you pay 14 years of that cash. The lower it is, the cheaper the stock.

The raw figure is not enough, because the same multiple can be expensive for one company and cheap for another. So I also look at where today's P/FCF sits in its own past: a rank of 0 means the price has never been this low in the history I have (a few years, depending on the company). I searched the top-rated US stocks for those combining a high score with this historical floor.

Four quality companies at the floor of their own price

The estimated buy price is the one at which my model would deliver a 15% annual return over five years, using a cash flow per share growth rate and exit multiple specific to each company. It is an estimate to debate, not a truth: the higher the assumed growth, the higher this price. Look mostly at the gap with the market price: very wide for three of them, almost nil for Chipotle.

What cash did while the price fell

All four at least doubled their free cash flow while their price eased. That is exactly what builds a valuation floor: cash climbs, the share price does not follow. One caveat on Intuit: its share count is not falling, because stock compensation for employees (about 26% of free cash flow) absorbs the buybacks.

Why the market avoids them: one mechanism each

**Intuit** reported fiscal 2026 revenue (year ended July 31, 2026) up 14% to $21.4B, with a fourth quarter of $4.4B also up 14% (Intuit results release). Nothing like a collapsing business. What the market prices in is the fear that AI agents will do to tax filing and bookkeeping what software did to paper. My own AI resilience test does see real fragility there: the company's future economic role is its main constraint. The discount is therefore a bet on fear, not a given.

**MercadoLibre** saw revenue jump 50% to $10.2B in the second quarter of 2026, the thirtieth straight quarter above 30% growth, but operating income fell 17% to $683M, a 6.7% margin (Q2 2026 results). Management deliberately invests in free shipping, credit and cross-border trade. The market punishes the falling margin and forgets that free cash flow has nearly doubled in two years ($3.1B, then $5.4B). If those investments build a lasting edge, today's multiple is a bargain; if not, it is a margin that will not come back.

**Mercury General** mostly insures cars in California. In the second quarter of 2026, net income rose 58% to $263.5M and its combined ratio (claims and costs paid per $100 of premiums; below 100, the insurer makes money on insurance itself) improved from 92.5% to 89.9% (Q2 2026 release). The 3.9 P/FCF has a trap I owe you: an insurer collects premiums before paying claims, and that temporarily idle money artificially inflates its free cash flow. A multiple this low therefore partly reflects a cash effect, and the California wildfires showed reserves can swell suddenly.

**Chipotle** posted second quarter comparable restaurant sales up 2.2% (1.2% average check, 1.0% traffic), revenue of $3.3B up 9.3%, and raised its full-year guidance (July 29, 2026 announcement). What the market mostly kept is that same-store sales growth has slowed sharply. Free cash flow has plateaued since 2024, and my revenue per employee criterion is the only one that clearly fails.

Low for itself does not mean cheap

That is the point this ranking brings out. Chipotle and Mercury General both sit at the floor of their history, but one trades at 29.6 times its cash and the other at 3.9. At 29.6 times, Chipotle is still an expensive stock: its current price is about where my model gives 15% a year, with no room for error. A stock's history tells you where it stands against itself, never whether it is cheap. You need both readings, and a margin of safety does the rest.

My ranking of interest, as of today: MercadoLibre and Intuit carry the widest gap to their estimated buy price, but for opposite reasons (a deliberately sacrificed margin, a disruption fear I cannot measure). Mercury General looks cheapest, with the insurer cash warning. Chipotle is a fine company priced at about its worth. All four trade in dollars, outside the French PEA, in an ordinary securities account, and a floor can always go lower.

That sorting, quality first, price second, then where the price sits in its own past, is what I wanted to do on any stock: I built my tool for it. You can read the detail on the Intuit, MercadoLibre, Mercury General and Chipotle pages, or reread the two-step method.

FAQ

What does it mean for a stock to be at the bottom of its valuation history?

Its current P/FCF, the share price divided by the cash it generates, is below nearly every value seen in its own past. It does not say the stock is cheap in absolute terms: a stock can sit at the floor of its history and still be expensive.

Why does Mercury General show such a low multiple?

Part of it comes from a cash effect specific to insurers: premiums are collected before claims are paid, which inflates free cash flow. The 3.9× should be taken with caution and reserves watched, especially after the California wildfires.

Can you hold these four stocks in a French PEA?

No. Intuit, MercadoLibre, Mercury General and Chipotle are listed in the US and are not eligible for the French PEA. They are held in an ordinary securities account, with currency risk on the dollar.

Is the estimated buy price a forecast?

No. It is the price at which my model would give a 15% annual return over five years under growth and exit multiple assumptions. It changes if those assumptions change, and should be read as an order of magnitude.

Related reading

• Undervalued US stocks: three real bargains, three caveats
• German stocks: where quality hides in the DAX
• Swiss stocks: the quality is known, and so is the price

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About the author

Written by Lubin Danilo, founder of Lubin Investment. A self-taught individual investor, I find fundamental analysis fascinating, and it has delivered excellent results. For three years now, my performance has beaten the S&P 500. But analyzing every stock took too much time: sites with incomplete data, calculation methods and criteria never aligned with mine. And spotting the best stocks was just as time-consuming, even with my own well-defined checklist. So I put my software development background to work to build this software, base my investment strategy on its results, and share it with people who share the same passion as me. It judges a company's quality and its price separately, using criteria drawn from the financial literature (Warren Buffett, Michael Mauboussin, Aswath Damodaran).