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, Financial), 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, Financial), 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, Financial), 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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