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Alberto Abaterusso
Alberto Abaterusso
Articles (2327) 

This Trio Trades Below the Peter Lynch Earnings Line

They could represent value opportunities

September 09, 2020 | About:

Value investors should take the time to consider the following stocks, as their share prices are trading below the Peter Lynch earnings line, which suggests they could represent value opportunities. These stocks also receive positive recommendation ratings from Wall Street sell-side analysts.

Darling Ingredients Inc

The first stock to consider is Darling Ingredients Inc (NYSE:DAR), an Irving, Texas-based producer and seller of natural ingredients that are derived from comestible and non-comestible bio-nutrients.

The below chart shows that the share price ($32.57 at close on Sept. 8) is currently trading below the Peter Lynch earnings line ($37.35 as of June 26) for a margin safety of 12.8%.

The stock price has performed strongly during the past year through Tuesday, moving up nearly 70% for a market capitalization of $5.28 billion and a 52-week range of $10.25 to $34.34.

Wall Street sell-side analysts predict that the share price will keep on trading higher, gaining 21.3% up to the average target price of $39.50 per share. These analysts have assigned an overweight recommendation rating to the stock.

GuruFocus has assigned a score of 5 out of 10 to the financial strength of the company and 6 out of 10 to the profitability.

BlackRock Inc. and VANGUARD GROUP INC lead the group of the company's top fund holders, owning 11.41% and 9.78% of shares outstanding, respectively.

Smith Micro Software Inc

The second stock to consider is Smith Micro Software Inc (NASDAQ:SMSI), a Pittsburgh, Pennsylvania-based developer of software applications that are being sold to global wireless and mobile network operators.

The below chart shows that the stock price ($3.67 per share as of Sept. 8) stands below the Peter Lynch earnings line ($3.90 as of June 28), yielding a margin safety of 6%.

The stock price has decreased by nearly 39% over the past year through Tuesday for a market capitalization of $151.78 million and a 52-week range of $3.28 to $7.15.

Wall Street sell-side analysts predict that the stock price will skyrocket within a year, gaining 95.4% from Tuesday's closing up to the average target price of $7.17 per share. The stock has a buy recommendation rating.

GuruFocus has assigned a score of 6 out of 10 to the financial strength of the company and 2 out of 10 to the profitability.

VANGUARD GROUP INC and BlackRock Inc. lead the group of the company's top fund holders, owning 5.19% and 5.01% of shares outstanding, respectively.

LTC Properties Inc

The third stock to consider is LTC Properties Inc (NYSE:LTC), a Westlake Village, California-based real estate investment trust company focusing on investments in seniors housing and healthcare properties and holding a portfolio of 180 assets distributed over 27 states.

The below chart exhibits that the stock price ($37.10 per share at close on Sept. 8) stands below the Peter Lynch earnings line ($39.60 as of June 28), which yields a margin safety of 6.3%.

The stock price did not perform well over the past year through Tuesday as it lost nearly 25%, determining a market capitalization of $1.46 billion and a 52-week range of $24.49 to $53.04.

Wall Street recommends holding the stock and has set an average target price of $36.13 per share.

GuruFocus has assigned a score of 3 out of 10 to the financial strength of the company and 7 out of 10 to the profitability.

BlackRock Inc. and VANGUARD GROUP INC lead the group of the company's top fund holders, owning 17.43% and 15.68% of shares outstanding, respectively.

Disclosure: I have no position in any security 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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