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 (FSS, Financial), 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 (KEM, Financial), 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 (LCII, Financial), 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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