Investors looking for opportunities amid fairly priced growing companies may be interested in the three stocks listed below, as their share prices are trading lower than their Peter Lynch Fair Values.
The Peter Lynch Fair Value is based on the idea that the fair price-earnings ratio for a growing company matches its growth rate (that is, the price-earnings-to-growth (PEG) ratio is equal to 1). The calculation is a combination of the following three factors:
- The stock's PEG ratio.
- The stock's five-year Ebitda growth rate.
- The stock's earnings per share (EPS) without non-recurring items (NRI) for the trailing twelve months (TTM) through the most recent quarter.
Intel Corp
The first stock that makes the cut is Intel Corp (INTC, Financial), a Santa Clara, California-based semiconductor company.
On Thursday, Intel Corp's share price closed at $44.95, well below its Peter Lynch Fair Value per share of $83.59 for a price-to-Peter-Lynch-Fair-Value Ratio of about 0.54. This ranks higher than 92% of the 224 companies that are operating in the semiconductors industry.
The stock has a market capitalization of $184.21 billion after a 22.23% decrease which happened over the past year. The 52-week range is $43.61 to $69.29.
Its price-earnings ratio is 8.81 (versus the industry median of 28.63), the price-book ratio is 2.47 (versus the industry median of 2.27) and the price-sales ratio is 2.47 (versus the industry median of 2.19).
The stock has a GuruFocus financial strength rating of 6 out of 10 and a profitability rating of 9 out of 10.
As of November, the stock has five strong buy recommendation ratings, 18 buy recommendation ratings, 13 hold recommendation ratings, one underperform recommendation rating and one sell recommendation rating on Wall Street. The average target price is $53.07 per share.
Sony Corp
The second stock that makes the cut is Sony Corp (SNE, Financial), a Japanese global consumer electronics company.
At close on Thursday, Sony Corp's American shares traded around $87.11, significantly below its Peter Lynch Fair Value per share of $129.20 for a price-to-Peter-Lynch-Fair-Value Ratio of about 0.67. The ratio ranks higher than 75% of the 596 companies that operate in the hardware industry.
The stock has a market capitalization of $107.46 billion after a 41% increase which occurred over the past year. The 52-week range is $50.94 to $90.88.
Its price-earnings ratio is 12.25 (versus the industry median of 23.91), the price-book ratio is 2.25 (versus the industry median of 1.81) and the price-sales ratio is 1.38 (versus the industry median of 1.24).
The stock has a GuruFocus financial strength rating of 6 out of 10 and a profitability rating of 5 out of 10.
As of November, the stock has two strong buy recommendation ratings on Wall Street with an average target price of $106.89 per share.
Nintendo Co Ltd
The third stock that makes the cut is Nintendo Co Ltd (NTDOY, Financial), a Japanese electronic gaming and multimedia company.
On Thursday, Nintendo Co Ltd.'s shares closed at $64.34, substantially below its Peter Lynch Fair Value per share of $84.52 for a price-to-Peter-Lynch-Fair-Value Ratio of about 0.76. This ranks higher than 80% of the 80 companies that are operating in the interactive media industry.
The stock has a market capitalization of $61.32 billion after a 33.8% increase which occurred over the past year. The 52-week range is $35.82 to $73.75.
Its price-earnings ratio is 18 (versus the industry median of 31.1), the price-book ratio is 4.05 (versus the industry median of 3.77) and the price-sales ratio is 4.19 (versus the industry median of 3.86).
The stock has a GuruFocus financial strength rating of 9 out of 10 and a profitability rating of 8 out of 10.
As of November, the stock has two strong buy recommendation ratings on Wall Street for an average target price of $82.81 per share.
Disclosure: I have no position in any security mentioned.
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