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Alberto Abaterusso
Alberto Abaterusso
Articles (2273) 

3 Stocks Trading Below the Peter Lynch Earnings Line

They could be value opportunities

August 02, 2020 | About:

Value investors may be interested in the following stocks, as their share prices are currently below the Peter Lynch earnings line, increasing the chance to buy value.

These stocks have also received optimistic recommendation ratings from Wall Street sell-side analysts.

Hanesbrands

The first stock investors may be interested in is Hanesbrands Inc. (NYSE:HBI), a Winston-Salem, North Carolina-based manufacturer and seller of various basic apparel for men, women and children.

The below chart illustrates that the share price ($14.13 at close on July 31) stands below the Peter Lynch earnings line for a margin of safety of approximately 33.7%.

The stock fell by almost 6% over the past year through Friday, determining a market capitalization of $4.92 billion and a 52-week range of $6.96 to $19.1.

Wall Street analysts forecast that the share price will start rising again, up to $15.11 price target, which reflects a 7% upside from Friday’s closing price. The stock has an overweight recommendation rating.

GuruFocus has assigned a score of 4 out of 10 to the financial strength and of 9 out of 10 to the profitability of the company.

The company's top fund holder is Vanguard Group Inc. with 13.16% of shares outstanding, followed by BlackRock Inc. with 7.38% and State Street Corp. with 6.21%.

Cleveland-Cliffs

The second stock under consideration is Cleveland-Cliffs Inc. (NYSE:CLF), a Cleveland, Ohio-based iron ore mining operator.

The below chart shows that the share price ($5.18 at close on July 31) is trading lower than the Peter Lynch earnings line, offering a margin of safety of approximately 63.6%.

The stock has fallen by 41.3% over the past year through Friday for a market capitalization of $2.07 billion and a 52-week range of $2.63 to $11.61.

Wall Street analysts predict that the share price will rebound strongly within a year, posting more than 20% gain up to $6.24 price target. The stock has an overweight recommendation rating.

GuruFocus has assigned a score of 3 out of 10 to the financial strength and of 6 out of 10 to the profitability of the company.

The company's top fund holder is BlackRock with 14.74% of shares outstanding, followed by Vanguard Group with 10.81% and State Street with 3.77%.

VEON

The third stock investors may want to consider is VEON Ltd. (NASDAQ:VEON), a Dutch provider of telecommunication services.

The chart illustrates that the share price ($1.69 at close on July 31) is trading below the Peter Lynch earnings line, for a margin of safety of about 15.5%.

The stock price has decreased nearly 41% over the past year through Friday for a market capitalization of $2.96 billion and a 52-week range of $1.25 to $3.28.

The share price is forecasted to bounce back and add 28.4% to Friday’s closing price for an average price target of $2.17 per share to hit within a year. The stock also holds an overweight recommendation rating among Wall Street sell-side analysts.

GuruFocus has assigned a score of 3 out of 10 to the financial strength and of 5 out of 10 to the profitability of the company.

With 3.84% of shares outstanding, TT International Asset Management Ltd. is the company's top fund holder, followed by Exor Investments (UK) LLP with 3.04% and Prosperity Capital Management Ltd. with 2.96%.

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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