A price-earnings ratio of less than 20 and a price-earnings to growth (aka PEG) ratio of less than 1 indicate that the following companies may be underestimated as of March 20, 2020.
In addition to the above-listed criteria, these stocks have received positive recommendation ratings of overweight to buy from sell-side analysts on Wall Street. The overweight recommendation rating indicates that the share price of the stock is predicted to outperform either the industry or the entire market.
Autohome
The first company to consider is Autohome Inc (ATHM, Financial).
Shares of the Chinese operator of websites that provide information to automobile consumers in the People's Republic of China were trading at a price of $67.87 per unit at close on Thursday for a market capitalization of $8.01 billion.
The price-earnings ratio is 17.58 (better than the industry median of 21.97) and the PEG ratio is 0.69 (better than the industry median of 1.02).
Year to date, the share price has dropped 15% to below the 50-day simple moving average line.
GuruFocus assigned the highest score of 10 out of 10 to the company’s financial strength rating and the near top score of 9 out of 10 to the profitability rating.
Wall Street sell-side analysts recommend an overweight rating for this stock and have established an average target price of 588.80 Chinese Yuan ($82.98) per share.
NV5 Global
The second company to consider is NV5 Global Inc (NVEE, Financial).
Shares of the Hollywood, Florida-based provider of engineering and construction services to several industries in the U.S. and internationally were trading at a price of $33.24 per unit on Thursday for a market capitalization of $428.59 million.
The price-earnings ratio is 17.68 (better than the industry median of 10.23) and the PEG ratio is 0.81 (better than the industry median of 0.99).
The share price has fallen 34% so far this year to below the 50-day simple moving average line.
GuruFocus assigned the company a moderate financial strength rating of 5 out of 10 and a very good profitability rating of 7 out of 10.
Wall Street sell-side analysts issued a buy recommendation rating for this stock with an average target price of $83.30 per share.
Vipshop Holdings
The third company to consider is Vipshop Holdings Ltd (VIPS, Financial).
Shares of the Chinese internet retailer for various brands in the People's Republic of China were trading at a price of $14.36 at close on Thursday for a market capitalization of $9.63 billion.
The price-earnings ratio is 16.89, significantly higher than the industry median. The PEG ratio of 0.48, which is better than the industry median of 1.64.
The share price has increased by 1% so far this year and now is slightly above the 50-day simple moving average line.
GuruFocus has assigned a high rating of 8 out of 10 for the company’s financial strength and a very good score of 7 out of 10 to the profitability rating.
Wall Street sell-side analysts recommend an overweight rating for this stock and have set an average target price of 128.76 Chinese yuan ($18.15) per share.
Disclosure: I have no positions in any securities mentioned.
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