A Trio of Stocks with Low 12-Month and Forward PEG Ratios
- By Alberto Abaterusso
If you are looking for bargain opportunities, you may want to have a look at the three securities listed below, as they seem underestimated by the market. Their trailing 12-month and forward price-earnings to growth (PEG) ratios trade below 1.5, which is the historical mean PEG ratio of the S&P 500 index as of Feb. 25.
The PEG ratio is calculated as the price-earnings ratio without non-recurring items divided by the five-year Ebitda growth rate. The forward PEG ratio is calculated as the price-earnings ratio without NRI divided by the expected Ebitda growth rate over the next five years based on Wall Street's estimates.
Furthermore, these stocks hold optimistic recommendation ratings amid sell-side analysts on Wall Street.
Applied Materials Inc
The first company that makes the cut is Applied Materials Inc (NASDAQ:AMAT), a Santa Clara, California-based supplier of manufacturing equipment, services and software to semiconductor producers.
As of Feb. 25, Applied Materials has a share price of $113.93, a price-earnings ratio of 27.26, a historical five-year Ebitda growth rate of 24% and a predicted future five-year Ebitda growth rate of 19.80%. Thus, the trailing 12-month PEG ratio is 1.14 and the forward PEG ratio is 1.38.
After a nearly 100% increase over the past year, the market capitalization stands at $104.55 billion and the 52-week range is $36.64 to $124.50.
GuruFocus assigned a score of 7 out of 10 for the company's financial strength and of 10 out of 10 for its profitability.
As of February, Wall Street sell-side analysts recommend five strong buys, 15 buys and one hold rating for the stock with an average target price of $133.75 per share.
Humana Inc
The second company that makes the cut is Humana Inc (NYSE:HUM), a Louisville, Kentucky-based healthcare plans company.
As of Feb. 25, Humana Inc has a share price of $380.59, a price-earnings ratio of 15.05, a historical five-year Ebitda growth rate of 16.70% and a predicted future five-year Ebitda growth rate of 12.28%. Therefore, the trailing 12-month PEG ratio is 0.90 and the forward PEG ratio is 1.23.
As a result of a 21.1% increase over the past year, the market capitalization is $49.04 billion and the 52-week range is $208.25 to $474.70.
GuruFocus assigned a score of 6 out of 10 for the company's financial strength and 9 out of 10 for its profitability.
As of February, Wall Street sell-side analysts recommend seven strong buys, five buys and seven hold ratings for an average target price of $477.71 per share.
Regeneron Pharmaceuticals Inc
The third company that makes the cut is Regeneron Pharmaceuticals Inc (NASDAQ:REGN), a New York-based biopharmaceutical company that engages in the discovery, development and production of drugs for the treatment of several medical conditions.
As of Feb. 25, Regeneron Pharmaceuticals Inc has a share price of $453.19, a price-earnings ratio of 14.78, a historical five-year Ebitda growth rate of 24.90% and a predicted future five-year Ebitda growth rate of 11.11%. Thus, the trailing 12-month PEG ratio is 0.59 and the forward PEG ratio is 1.33.
Following a 5% increase over the past year, the market capitalization is $48.55 billion and the 52-week range is $418.01 to $664.64.
GuruFocus assigned a score of 7 out of 10 to the company's financial strength rating and 8 out of 10 to its profitability.
As of February, Wall Street sell-side analysts recommend seven strong buys, six buys, 12 hold ratings and one underperform rating for an average target price of $650.83 per share for this stock.
Disclosure: I have no positions in any securities mentioned.
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This article first appeared on GuruFocus.
