3 Potential Bargains for the Value Investor

Two key valuation ratios indicate these stocks may be underestimated by the market

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As of June 9, the following stocks look undervalued by the market, as their price-earnings ratios stand below 20 and their price-earnings to growth (PEG) ratios are below 1. Furthermore, Wall Street sell-side analysts have produced positive recommendation ratings for these stocks.

Cabot Oil & Gas Corp

The first company under consideration is Cabot Oil & Gas Corp (COG, Financial), a Houston, Texas-based oil and gas explorer and producer.

Shares of Cabot Oil & Gas Corp traded at $21.93 per unit at close on Tuesday for a market capitalization of $8.74 billion.

The price-earnings ratio of 19.24 is higher than the industry median of 10.18. The PEG ratio of 0.71 is better positioned than the industry median of 0.95.

The share price has dropped 8.6% over the past year. However, it still trades nearly 8% above the midpoint of the 52-week range of $13.06 to $27.57.

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GuruFocus assigned a positive rating of 5 out of 10 for the company’s financial strength and a positive rating of 6 out of 10 for its profitability.

Wall Street sell-side analysts recommend an overweight rating for this stock.

Malibu Boats Inc

The second company under consideration is Malibu Boats Inc (MBUU, Financial), a Loudon, Tennessee-based designer and manufacturer of recreational boats.

Shares of Malibu Boats Inc traded at a price of $52.55 per unit at close on Tuesday for a market capitalization of $1.08 billion.

The stock has a price-earnings ratio of 14.68, which is higher than the industry median of 14.54, while the PEG ratio of 0.3 is more compelling than the industry median of 1.38.

The share price has risen 44.33% over the past year to trade about 40.2% above the midpoint of the 52-week range of $18.02 to $56.93.

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

Wall Street sell-side analysts issued an overweight recommendation rating for this stock.

LGI Homes Inc

The third company under consideration is LGI Homes Inc (LGIH, Financial), a Texas-based home building company that operates in the U.S.

Shares of LGI Homes Inc traded at a price of $87.18 per unit at close on Tuesday for a market capitalization of $2.19 billion.

The stock has a price-earnings ratio of 10.98, which is higher than the industry median of 10.04, and a PEG ratio of 0.33, which is more compelling than the industry median of 0.53.

The share price has risen 23.2% over the past year to place 35.5% above the midpoint of the 52-week range of $33 to $95.72.

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GuruFocus assigned a moderate rating of 4 out of 10 to the company's financial strength and a high rating of 8 out of 10 for its profitability.

Wall Street sell-side analysts recommend a hold rating for this stock.

Disclosure: I have no positions in any securities mentioned.

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