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Alberto Abaterusso
Alberto Abaterusso
Articles (2380) 

A Trio of Stocks Trading Below the Peter Lynch Earnings Line

They could represent value opportunities

October 15, 2020 | About:

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

Cheniere Energy Inc

The first stock to consider is Cheniere Energy Inc (LNG), a Houston, Texas-based liquefied natural gas midstream operator.

The below chart shows that the share price ($49.51 at close on Oct. 14) is currently trading below the Peter Lynch earnings line ($64.50 as of June 26) for a margin safety of 23.24%.

The stock price disappointed during the past year through Wednesday, as it moved down 20.7%, determining a market capitalization of $12.49 billion and a 52-week range of $27.06 to $67.11.

Wall Street sell-side analysts forecast that the share price will rebound, gaining approximately 34% up to the average target price of $66.33 per share. These analysts have assigned a buy recommendation rating to the stock.

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

VANGUARD GROUP INC leads the group of the company's top fund holders, owning 8.79% of shares outstanding. It is followed by Carl Icahn with 8.25% of shares outstanding and BlackRock Inc. with 6.14% of shares outstanding.

Boston Properties Inc

The second stock investors may want to consider is Boston Properties Inc (NYSE:BXP), a Boston-based real estate investment trust focusing on office space properties.

The below chart shows that the stock price ($79.61 per share as of Oct. 14) is underneath the Peter Lynch earnings line ($97.80 as of June 28), yielding a margin safety of 18.6%.

The stock price performed poorly over the past year through Wednesday, losing nearly 38%, which determined a market capitalization of $12.39 billion and a 52-week range of $71.57 to $147.83.

Wall Street sell-side analysts predict that the stock price will bounce back strongly over the next 12 months, gaining more than 30% from Wednesday's closing to hit the average target price of $103.76 per share.

GuruFocus has assigned a score of 3 out of 10 to the financial strength of the company and a score of 8 out of 10 to the profitability.

VANGUARD GROUP INC leads the group of the company's top fund holders, owning 13.62% of shares outstanding. It is followed by BlackRock Inc. with 10.34% of shares outstanding and STATE STREET CORP with 6.02% of shares outstanding.

GlaxoSmithKline

The third stock to consider is British pharmaceutical giant GlaxoSmithKline PLC (NYSE:GSK).

The below chart exhibits that the stock price ($37.21 per share at close on Oct. 14) stands below the Peter Lynch earnings line ($50.16 as of June 28), which yields a margin safety of 25.82%.

The stock price performance dissatisfied shareholders over the past year through Wednesday, as it fell by 12%, pushing the market capitalization down to $93.35 billion and determining a 52-week range of $31.43 to $48.25.

Wall Street sell-side analysts foresee that the share price will bounce back, growing 30% up to the average target of $48.01 within a year. They have recommended an overweight rating for this stock.

GuruFocus has assigned a score of 4 out of 10 to the financial strength of the company and 8 out of 10 to the profitability.

Dodge & Cox dominates the group of the company's top fund holders, owning 1.66% of shares outstanding. Jim Simons and Capital International Investors follow with 0.82% and 0.76% 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 how to pick potential value stocks. Gold, silver and precious metals mining industries is also my cup of tea. 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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