As of April 1, the three stocks below appear to be undervalued by the market as their price-earnings ratios without non-recurring items stand below 20 while their price-earnings to growth ratios are near or below 1.
Furthermore, Wall Street sell-side analysts have issued positive recommendation ratings, increasing the probability they will perform well in the coming months.
Ternium
The first company that makes the cut is Ternium SA (TX, Financial), a Luxembourg-based producer of various steel products primarily in the U.S. and Mexico.
As of April 1, the price-earnings ratio without NRI is 10.12, which is more compelling than the industry median of 17.23, while the PEG ratio of 0.74 is also below the industry median of 1.39.
The stock had net earnings of $3.86 per share for the trailing 12 months that ended in December 2020 and a five-year Ebitda growth rate of 13.70%.
On April 1, the closing price was $39.07 per share. The share price has risen by 220.25% over the past year for a market capitalization of $7.67 billion and a 52-week range of $11.78 to $40.55.
GuruFocus assigned a score of 6 out of 10 for the company's financial strength and 7 out of 10 for its profitability.
As of March, Wall Street sell-side analysts recommended a median rating of buy and an average target price of $38.92 per share for the stock.
Quidel
The second company that meets the criteria is Quidel Corp. (QDEL, Financial), a San Diego-based manufacturer of diagnostic testing solutions for applications in several medical fields, including infectious diseases, cardiology, gastrointestinal diseases and toxicology.
As of April 1, the price-earnings ratio without NRI is 7.01, which is more appealing than the industry median of 34.08, while the PEG ratio is 0.07, which is lower than the industry median of 2.41.
The stock had net earnings of $18.59 per share for the trailing 12 months that ended in December and a five-year Ebitda growth rate of 96.50%.
The closing price on April 1 was $130.31 per share. The share price has increased by 35.3% over the past year, determining a market capitalization of $5.51 billion and a 52-week range of $73.01 to $306.72.
GuruFocus assigned a score of 8 out of 10 for the company's financial strength and 6 out of 10 for its profitability.
As of March, Wall Street sell-side analysts recommend a median rating of hold for the stock and have established an average target price of $203.20 per share.
Essent Group
The third company that qualifies is Essent Group Ltd. (ESNT, Financial), a Bermuda-based provider of U.S. residential properties-backed private mortgage insurance and reinsurance.
As of April 1, the price-earnings ratio without NRI is 12.02, which is more compelling than the industry median of 13.27, while the PEG ratio trades at 0.71, which is also below the industry median of 1.80.
The stock had net earnings of $3.88 per share for the trailing 12 months that ended in December and a five-year Ebitda growth rate of 17%.
The closing price on April 1 was $46.63 per share. The share price increased by 86.52% over the past year for a market capitalization of $5.26 billion and a 52-week range of $17.52 to $49.53.
GuruFocus assigned a score of 5 out of 10 to the company's financial strength rating and 6 out of 10 to its profitability.
As of March, Wall Street sell-side analysts recommend a median rating of buy with an average target price of $55 per share for the stock.
Disclosure: I have no positions in any securities mentioned.
Read more here:
- A Trio of Low Price-Book Ratio Stock Picks
- A Trio of High Earnings Return Stocks
- 3 Low Forward Price-Earnings Ratio Stock Picks
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