Investors seeking opportunities amid growing companies may want to consider the following three stocks, as their share prices are trading lower than their Peter Lynch Fair Values.
The Peter Lynch Fair Value, which is based on the idea that the fair price-earnings (PE) value for a growing company matches its growth rate, results from the combination of the following three factors:
- The stock's PEG ratio
- The stock's five-year Ebitda growth rate
- The stock's earnings per share (EPS) without non-recurring items (NRI) for the trailing twelve months (TTM) through the most recent quarter
Progressive Corp
The first stock that makes the cut is Progressive Corp (PGR, Financial), a Mayfield, Ohio-based provider of several insurance products for personal and commercial auto, residential properties and specialty property casualties in the U.S.
On Wednesday, Progressive Corp's share price closed at $93.60, significantly below its Peter Lynch Fair Value per share of $215.50 for a price-to-Peter-Lynch-Fair-Value ratio of about 0.43. This ranks higher than 86.42% of the 81 companies that operate in the insurance industry.
The stock has a market capitalization of $54.79 billion after a 31.53% increase that occurred over the past year. The 52-week range is $62.18 to $102.50.
Also, its price-earnings ratio is 10.86 (versus the industry median of 12.44), the price-book ratio is 3.12 (versus the industry median of 1.07) and the price-sales ratio is 1.31 (versus the industry median of 1.02).
The stock has a GuruFocus financial strength rating of 5 out of 10 and a profitability rating of 7 out of 10.
As of December, the stock has five strong buy recommendation ratings, four buy recommendation ratings, eight hold recommendation ratings, one underperform recommendation rating and one sell recommendation rating on Wall Street. The average target price is $99.50 per share.
Regeneron Pharmaceuticals Inc
The second stock that makes the cut is Regeneron Pharmaceuticals Inc (REGN, Financial), a New York-based biopharmaceutical company that engages in the discovery, development and production of drugs for the treatment of several medical conditions.
On Wednesday, Regeneron's share price closed at $488.64, substantially below its Peter Lynch Fair Value per share of $639.95 for a price-to-Peter-Lynch-Fair-Value ratio of about 0.76. This ranks higher than 80.77% of 52 companies that operate in the biotechnology industry.
The stock has a market capitalization of $52.14 billion after a 30.82% increase that occurred over the past year. The 52-week range is $328.13 to $664.64.
Also, its price-earnings ratio is 17.86 (versus the industry median of 44.68), the price-book ratio is 5.15 (versus the industry median of 4.47) and the price-sales ratio is 6.08 (versus the industry median of 18.86).
The stock has a GuruFocus financial strength rating of 7 out of 10 and a profitability rating of 8 out of 10.
As of December, the stock has seven strong buy recommendation ratings, six buy recommendation ratings, 12 hold recommendation ratings and one underperform recommendation rating on Wall Street. The average target price is $673.13 per share.
ITOCHU Corp
The third stock that makes the cut is ITOCHU Corp (ITOCY, Financial), a Japanese conglomerate company engaging in various businesses worldwide. These include textiles, machineries, metals and minerals, energy and chemicals, food products, general products and realty, information and communication technology.
On Wednesday, ITOCHU's share price closed at $55.71, significantly below its Peter Lynch Fair Value per share of $134.51 for a price-to-Peter-Lynch-Fair-Value ratio of about 0.41. This ranks higher than 81.31% of the 107 companies that operate in the conglomerates industry.
The stock has a market capitalization of $41.46 billion after a 21.85% increase that took place over the past year. The 52-week range is $33.16 to $57.30.
Also, its price-earnings ratio is 9.31 (versus the industry median of 16.71), the price-book ratio is 1.35 (versus the industry median of 1.07) and the price-sales ratio is 0.42 (versus the industry median of 0.85).
The stock has a GuruFocus financial strength rating of 5 out of 10 and a profitability rating of 8 out of 10.
On Wall Street, the stock has a median recommendation rating of buy and an average target price of $58.24 per share.
Disclosure: I have no position in any security mentioned.
Read more here:
- 3 High-Return Stock Picks
- A Trio of Potential Bargains
- A Trio of Opportunities Trading at Low Price-to-Free-Cash-Flow Ratios
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
