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Alberto Abaterusso
Alberto Abaterusso
Articles (2608) 

A Trio of Stocks with Low 12-Month and Forward PEG Ratios

These could be bargain opportunities

February 26, 2021 | About:

If you are looking for bargain opportunities, you may want to have a look at the three securities listed below, as they seem underestimated by the market. Their trailing 12-month and forward price-earnings to growth (PEG) ratios trade below 1.5, which is the historical mean PEG ratio of the S&P 500 index as of Feb. 25.

The PEG ratio is calculated as the price-earnings ratio without non-recurring items divided by the five-year Ebitda growth rate. The forward PEG ratio is calculated as the price-earnings ratio without NRI divided by the expected Ebitda growth rate over the next five years based on Wall Street's estimates.

Furthermore, these stocks hold optimistic recommendation ratings amid sell-side analysts on Wall Street.

Applied Materials Inc

The first company that makes the cut is Applied Materials Inc (NASDAQ:AMAT), a Santa Clara, California-based supplier of manufacturing equipment, services and software to semiconductor producers.

As of Feb. 25, Applied Materials has a share price of $113.93, a price-earnings ratio of 27.26, a historical five-year Ebitda growth rate of 24% and a predicted future five-year Ebitda growth rate of 19.80%. Thus, the trailing 12-month PEG ratio is 1.14 and the forward PEG ratio is 1.38.

After a nearly 100% increase over the past year, the market capitalization stands at $104.55 billion and the 52-week range is $36.64 to $124.50.

GuruFocus assigned a score of 7 out of 10 for the company's financial strength and of 10 out of 10 for its profitability.

As of February, Wall Street sell-side analysts recommend five strong buys, 15 buys and one hold rating for the stock with an average target price of $133.75 per share.

Humana Inc

The second company that makes the cut is Humana Inc (NYSE:HUM), a Louisville, Kentucky-based healthcare plans company.

As of Feb. 25, Humana Inc has a share price of $380.59, a price-earnings ratio of 15.05, a historical five-year Ebitda growth rate of 16.70% and a predicted future five-year Ebitda growth rate of 12.28%. Therefore, the trailing 12-month PEG ratio is 0.90 and the forward PEG ratio is 1.23.

As a result of a 21.1% increase over the past year, the market capitalization is $49.04 billion and the 52-week range is $208.25 to $474.70.

GuruFocus assigned a score of 6 out of 10 for the company's financial strength and 9 out of 10 for its profitability.

As of February, Wall Street sell-side analysts recommend seven strong buys, five buys and seven hold ratings for an average target price of $477.71 per share.

Regeneron Pharmaceuticals Inc

The third company that makes the cut is Regeneron Pharmaceuticals Inc (NASDAQ:REGN), a New York-based biopharmaceutical company that engages in the discovery, development and production of drugs for the treatment of several medical conditions.

As of Feb. 25, Regeneron Pharmaceuticals Inc has a share price of $453.19, a price-earnings ratio of 14.78, a historical five-year Ebitda growth rate of 24.90% and a predicted future five-year Ebitda growth rate of 11.11%. Thus, the trailing 12-month PEG ratio is 0.59 and the forward PEG ratio is 1.33.

Following a 5% increase over the past year, the market capitalization is $48.55 billion and the 52-week range is $418.01 to $664.64.

GuruFocus assigned a score of 7 out of 10 to the company's financial strength rating and 8 out of 10 to its profitability.

As of February, Wall Street sell-side analysts recommend seven strong buys, six buys, 12 hold ratings and one underperform rating for an average target price of $650.83 per share for this stock.

Disclosure: I have no positions in any securities 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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