In order to increase your chances to come across stocks that hold value, one method is to search for stocks with an attractive forward price-earnings ratio.
For the purposes of this article, I will look at stocks with a forward price-earnings ratio that is lower than the S&P 500 index's historical average of 15. The S&P 500 is a benchmark for the U.S. market.
Smith Micro Software Inc
The first company under consideration is Smith Micro Software Inc (SMSI, Financial), a Pittsburgh, Pennsylvania-based developer and seller of software applications to wireless and mobile network operators worldwide.
Smith Micro Software has a forward price-earnings ratio of 12.5 (compared to the industry median of 23.75), which is the result of a share price of $4.50 as of April 27 and analyst expectations of 24% growth in earnings per share over the next full fiscal year.
The stock price has risen by almost 58% in the past year, determining a market cap of $1.62 billion and a 52-week range of $26.72 to $53.04.
The stock has an overweight recommendation rating on Wall Street and an average target price of $51.73.
Of the top fundholders with stakes in Smith Micro Software Inc, Vanguard Group Inc is the largest investor with 4.84% of outstanding shares, followed by Black Rock Inc. with 1.28% and Millennium Management LLC with 0.83%.
Silicon Motion Technology Corp
The second company under consideration is Silicon Motion Technology Corp (SIMO, Financial), a Hong Kong-based manufacturer and marketer of semiconductors.
Silicon Motion Technology has a forward price-earnings ratio of 14.53, which results from Monday’s closing share price of $44.77 and analyst expectations of $3.09 in EPS for the next full fiscal year.
The stock price has risen by almost 20% in the past year and now has a market cap of $1.62 billion and a 52-week range of $2.75 to $7.15.
The stock has a buy recommendation rating on Wall Street and an average target price of $9.38.
With a 25.90% stake, Cardinal Capital Management LLC/CT is the company’s largest top fundholder. Yiheng Capital LLC owns 21.65% of shares outstanding and Massachusetts Financial Services Co /MA/ owns 10.45%.
F5 Networks Inc
The third company under consideration is F5 Networks Inc (FFIV, Financial), a Seattle-based provider of multi-cloud application services and delivery networking.
F5 Networks Inc has a forward price-earnings ratio of 13.81 versus the industry median of 23.75. The stock’s forward price-earnings ratio is the result of a share price of $130.92 as of April 27 and analyst expectations of 70% growth in EPS over the next full fiscal year.
The stock price has fallen by almost 18% in the past year, determining a market cap of $7.96 billion and a 52-week range of $79.78 to $168.94.
The stock has a hold recommendation rating on Wall Street and an average target price of $139.47 per share.
Of the top fundholders with stakes in F5 Networks Inc, Vanguard Group Inc is the largest investor with 11.16% of outstanding shares. Other top fund holders include Black Rock Inc. with 7.96% and State Street Corp with 5.04%.
Disclosure: I have no positions in any securities mentioned in this article.
Read more here:
- 3 Stocks With Low Price-Sales Ratios
- A Trio of Stocks Growing Capex Fast
- 3 Stocks Trading at Attractive Valuations
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