One strategy to uncover value opportunities is to look for stocks with an enticing forward price-earnings ratio.
Investors may thus like the following three stocks, as they have a forward price-earnings ratio that stands below the S&P 500 index's historical average of 15. Estimates of future earnings are based on data from Morningstar analysts.
Broadcom Inc
The first stock that makes the cut is Broadcom Inc AVGO, a San Jose, California-based manufacturer and distributor of various semiconductors worldwide.
Broadcom Inc has a forward price-earnings ratio of 14.45 (versus the industry median of 19.65), which results from Friday's closing price of $359.70 per share and analyst expectations for net earnings of nearly $25 for the next full fiscal year.
The stock price has risen 24.6% over the past year for a market capitalization of $144.67 billion and a 52-week range of $155.67 to $378.96.
GuruFocus has assigned a moderate rating of 4 out of 10 for the company's financial strength and a very high rating of 9 out of 10 for its profitability.
Wall Street sell-side analysts recommend a buy rating with an average price target of $401.31 per share of Broadcom Inc.
Lumentum Holdings Inc
The second stock that qualifies is Lumentum Holdings Inc LITE, a San Jose, California-based manufacturer and seller of optical and photonic products to industries worldwide.
Lumentum Holdings Inc has a forward price-earnings ratio of 12.77 (versus the industry median of 17.09), which is the result of Friday's closing price of $70.49 per share and analyst expectations for EPS of about $5.52 for the next full fiscal year.
The stock price has risen 19% over the past year for a market capitalization of $5.3 billion and a 52-week range of $48.44 to $96.74.
GuruFocus has assigned a positive rating of 6 out of 10 for the company's financial strength and another positive rating of 5 out of 10 for its profitability.
Wall Street sell-side analysts recommend a buy rating with an average price target of $105.81 per share of Lumentum Holdings Inc
KLA Corp
The third stock that meets the criteria is KLA Corp KLAC, a Milpitas, California-based company that provides semiconductor and nanoelectronics companies with process control and yield management solutions.
KLA Corp has a forward price-earnings ratio of 14.68 (versus the industry median of 19.65), which derives from Friday's closing price of $171.94 per share and analysts' expectations for EPS of approximately $11.71 for the next full fiscal year.
The stock price has risen 13.7% over the past year for a market capitalization of $26.73 billion and a 52-week range of $110.19 to $218.57.
GuruFocus has assigned a positive rating of 5 out of 10 for the company's financial strength and a remarkably high rating of 9 out of 10 for its profitability.
Wall Street sell-side analysts recommend an overweight rating with an average price target of $218.13 per share of KLA Corp.
Disclosure: I have no positions in any securities mentioned.
Read more here:
- A Trio of Stocks With Low Price-Sales Ratios to Consider
- 3 Stocks Growing Capex Fast
- 3 Fast-Growing Small Caps
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