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Alberto Abaterusso
Alberto Abaterusso
Articles (2203) 

A Potentially Undervalued Trio to Consider

2 key valuation ratios suggest potential bargains

May 13, 2020 | About:

As of May 12, the following stocks might be undervalued by the market, as their price-earnings ratios are less than 20 and their price-earnings to growth (PEG) ratios stand below 1.

Furthermore, these stocks have received positive recommendation ratings from sell-side analysts on Wall Street.

Federal Signal Corp

The first company that possesses the above listed criteria is Federal Signal Corp (NYSE:FSS), an Oak Brook, Illinois-based manufacturer and supplier of safety and security products and environmental solutions to U.S. and international organizations.

Shares of Federal Signal Corp traded at $26.54 per unit at close on Tuesday for a market capitalization of $1.6 billion.

The price-earnings ratio of 14.27 and PEG ratio of 0.99 are lower than the industry medians, which stand at 16.21 and 1.51, respectively.

The share price has risen 4.4% over the past year to trade at about 11.3% above the midpoint of the 52-week range of $23.32 to $35.75.

GuruFocus assigned a positive score of 6 out of 10 to the company’s financial strength and a very good rating of 7 out of 10 to its profitability.

Wall Street sell-side analysts recommend an overweight rating for this stock and have established an average target price of $33 per share.

Kemet Corp

The second company that possesses the above listed criteria is Kemet Corp (NYSE:KEM), a Fort Lauderdale, Florida-based global manufacturer and seller of electronic components.

Shares of Kemet Corp traded at a price of $27.04 per unit on Tuesday for a market capitalization of $1.58 billion.

The price-earnings ratio of 11.86 and PEG ratio of 0.28 are lower than the industry medians of 18.16 and 1.57, respectively.

The share price has risen by 60% over the past year to trade about 24.4% above the midpoint of the 52-week range of $15.87 to $27.61.

GuruFocus assigned a positive rating of 6 out of 10 to the company's financial strength and profitability.

Wall Street sell-side analysts issued a hold recommendation rating for this stock and have established an average target price of $27.10 per share.

LCI Industries Inc

The third company that possesses the above listed criteria is LCI Industries Inc (NYSE:LCII), an Elkhart, Indiana-based manufacturer and supplier of components for recreational vehicles in the U.S. and internationally.

Shares of LCI Industries Inc traded at a price of $82.47 at close on Tuesday for a market capitalization of $2.07 billion.

The price-earnings ratio of 14.81 is a bit higher than the industry median of 12.26, but the PEG ratio of 0.92 is more favourable than the industry median of 1.19.

The share price has dropped nearly 8.5% over the past year to trade at a 4% discount to the midpoint of the 52-week range of $55.29 to $116.51.

GuruFocus has assigned a moderate score of 5 out of 10 to the company’s financial strength and a very high score of 9 out of 10 to its profitability.

Wall Street sell-side analysts recommend an overweight rating for this stock and have established an average target price of $91.17 per share.

Disclosure: I have no positions in any securities mentioned.

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About the author:

Alberto Abaterusso
I am a contributor at GuruFocus. I primarily write about gold, silver and precious metals mining industries. My articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. I hold a Master's Degree in Business Administration from Università degli Studi di Bari (Italy), Aldo Moro. I am based in The Netherlands.

You can follow me on Twitter at https://twitter.com/AAbaterusso

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