As of Oct. 27, the following stocks appear undervalued by the market, as their price-earnings (PE) ratios without non-recurring items (NRI) are below 20 while their price-earnings to growth (PEG) ratios are not more than 1.
Furthermore, these stocks have received positive recommendation ratings from Wall Street sell-side analysts.
Lithia Motors Inc
The first company that meets the criteria is Lithia Motors Inc (LAD, Financial), a Medford, Oregon-based automotive retailer.
As of Oct. 27, the PE ratio without NRI is 15.68, which is more compelling than the industry median of 23.05, while the PEG ratio is 0.77, which is also more compelling than the industry median of 2.38.
On Oct. 27, the closing price was $236.75 per share, net earnings without NRI was $15.10 per share for the trailing twelve months and the Ebitda growth rate was 20.30%.
The share price increased by 48.3% over the past year, determining a market capitalization of $6.28 billion and fluctuating in a 52-week range of $55.74 to $288.56.
GuruFocus assigned a rating of 5 out of 10 for the company's financial strength and a rating of 8 out of 10 for its profitability.
As of October, Wall Street sell-side analysts recommend four strong buys, four buys, three holds and one underperform rating. They have also established an average target price of $285.38 per share.
Credit Acceptance Corp
The second company that meets the criteria is Credit Acceptance Corp (CACC, Financial), a Southfield, Michigan-based provider of credit services to U.S. independent and franchised automobile dealers.
As of Oct. 27, the PE ratio without NRI was 17.91 and the PEG ratio was 0.99, comparing favorably to the industry medians of 12.93 and 1.01, respectively.
The closing price on Oct. 27 was $324.58 per share, while net earnings without NRI were $18.12 per share for the trailing twelve months and the Ebitda growth rate was 18.10%.
The share price decreased by 26.44% over the past year for a market capitalization of $5.73 billion and a 52-week range of $199 to $539.
GuruFocus assigned a rating of 3 out of 10 for the company's financial strength and a rating of 9 out of 10 for its profitability.
As of October, Wall Street sell-side analysts recommend a median rating of hold with an average target price of $305.17 per share for the stock.
Asbury Automotive Group Inc
The third company that qualifies is Asbury Automotive Group Inc (ABG, Financial), a Duluth, Georgia-based automotive retailer of new and used vehicles, spare parts and related services of vehicle maintenance and repair in the U.S.
As of Oct. 27, the PE ratio without NRI was 12.98 compared to the industry median of 23.04, while the PEG ratio stood at 0.93 vs. the industry median of 2.38.
The closing price on Oct. 27 was $106.04 per share, while net earnings without NRI was $8.17 per share for the trailing twelve months and the Ebitda growth rate was 14%.
The share price increased by 1.5% over the past year for a market capitalization of $2.05 billion and a 52-week range of $39.36 to $125.
GuruFocus assigned a rating of 5 out of 10 to the company's financial strength and of 8 out of 10 to its profitability.
As of October, Wall Street sell-side analysts recommend three strong buys, six holds and one underperform rating for an average target price of $121 per share.
Disclosure: I have no positions in any security mentioned.
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