As of April 30, the following stocks appear to be underestimated by the market as their price-earnings ratios without non-recurring items trade below 20 while their price-earnings to growth ratios trade near or below 1.
Furthermore, Wall Street sell-side analysts have issued positive recommendation ratings, indicating expectations for higher share prices over the months ahead.
SLM
The first company that meets the criteria is SLM Corp. (SLM, Financial), a Newark, Delaware-based provider of education loans to support students and their families in financing the cost of education in the U.S.
As of April 30, the price-earnings ratio without NRI is 6.34, which is more appealing than the industry median of 15, while the PEG ratio of 0.47 is more compelling than the industry median of 1.28.
The stock had net earnings of $3.10 per share for the trailing 12 months that ended in March 2021 and a five-year book value growth rate of 13.50%.
On April 30, the closing price was $19.66 per share. The share price has risen by 143.02% over the past year for a market capitalization of $6.20 billion and a 52-week range of $6.48 to $19.92.
As of April, Wall Street sell-side analysts recommend a median rating of buy and an average target price of $22.60 per share for the stock.
Radian Group
The second company that makes the cut is Radian Group Inc. (RDN, Financial), a Philadelphia-based specialty insurer serving mortgage originators and lenders, mortgage investors, government-sponsored enterprises and real estate investors, brokers and agents.
As of April 30, the price-earnings ratio without NRI is 12.26, which is more compelling than the industry median of 13.56, while the PEG ratio is 1.26, which has more appeal than the industry median of 1.43.
The stock had net earnings of $2.01 per share for the trailing 12 months that ended in December 2020 and a five-year Ebitda growth rate of 9.80%.
The closing price on April 30 was $24.64 per share. The share price has increased by 78.03% over the past year, determining a market capitalization of $4.71 billion and a 52-week range of $12.415 to $25.31.
As of April, Wall Street sell-side analysts recommend a median rating of buy for the stock and have established an average target price of $25.95 per share.
KB Home
The third company that holds the criteria is KB Home (KBH, Financial), a Los Angeles-based homebuilder.
As of April 30, the price-earnings ratio without NRI is 13.7, which is more compelling than the industry median of 14.77, while the PEG ratio of 0.58 is also more appealing than the industry median of 0.85.
The stock had net earnings of $3.52 per share for the trailing 12 months that ended in February 2021 and a five-year Ebitda growth rate of 23.80%.
The closing price on April 30 was $48.23 per share. The share price has climbed by 86.79% over the past year for a market capitalization of $4.76 billion and a 52-week range of $22.63 to $50.16.
As of April, Wall Street sell-side analysts recommend a median rating of overweight with an average target price of $54.27 per share for the stock.
Disclosure: I have no positions in any securities mentioned.
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