Investors looking for opportunities among growing companies could be interested in the following three stocks, as their share prices are trading lower than their Peter Lynch Fair Values.
The Peter Lynch Fair Value, which is based on the idea that the fair price-earnings (PE) ratio for a growing company matches its growth rate, stems from the combination of the following three components:
- 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.
Nexstar Media Group Inc
The first stock that matches the criteria is Nexstar Media Group Inc (NXST, Financial), an Irving, Texas-based television broadcasting and digital media company.
On Tuesday, Nexstar Media Group Inc's share price closed at $149.28, significantly below its Peter Lynch Fair Value per share of $437, for a price-to-Peter-Lynch-Fair-Value ratio of about 0.34. This ranks higher than 94% of the 113 companies that operate in the media–diversified industry.
The stock has a market capitalization of $6.48 billion after a 135% jump that took place over the past year. The 52-week range is $49 to $163.62.
The stock has a GuruFocus financial strength rating of 3 out of 10 and a profitability rating of 9 out of 10.
As of March, the stock has a median recommendation rating of overweight on Wall Street. The average target price is $168.38 per share.
MasTec Inc
The second stock that makes the cut is MasTec Inc (MTZ, Financial), a Coral Gables, Florida-based engineering and construction company serving communications, energy, utility and several other infrastructure markets primarily in North America.
On Tuesday, MasTec Inc's share price closed at $87.26, significantly below the Peter Lynch Fair Value per share of $109.75, yielding a price-to-Peter-Lynch-Fair-Value ratio of about 0.80. This ranks higher than 61% of the 363 companies that operate in the construction industry.
The stock has a market capitalization of $6.48 billion after a 195% increase that happened over the past year. The 52-week range is $27.09 to $99.38.
The stock has a GuruFocus financial strength rating of 5 out of 10 and a profitability rating of 7 out of 10.
As of March, the stock has a median recommendation rating of buy on Wall Street and an average target price of $99.20 per share.
CACI International Inc
The third stock is CACI International Inc (CACI, Financial), an Arlington, Virginia-based provider of business systems, cybersecurity, enterprise-wide information solutions and intelligence services to various private and public organizations worldwide.
On Tuesday, CACI International Inc's share price closed at $246.05, well below its Peter Lynch Fair Value per share of $358, for a price-to-Peter-Lynch-Fair-Value ratio of about 0.69. This ranks higher than 89% of the 495 companies that operate in the software industry.
The stock has a market capitalization of $6.21 billion due to a 20.82% increase that occurred over the past year. The 52-week range is $190.16 to $266.31.
The stock has a GuruFocus financial strength rating of 5 out of 10 and a profitability rating of 8 out of 10.
As of March, the stock has a median recommendation rating of buy on Wall Street, while the average target price is $290.75 per share.
Disclosure: I have no position in any security mentioned.
Read more here:
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