4 Stocks With Low PEG Ratios

They appear to be good opportunities given their growth potential

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Jan 23, 2022
Summary
  • Titan Machinery, CRA International, Koppers Holdings and America's Car-Mart appear to be underestimated by the market.
  • At 1.5 or less, their trailing 12-month and forward price-earnings to growth ratios are more attractive than the S&P 500's historical average.
  • Wall Street sell-side analysts have also issued positive recommendation ratings for these stocks.
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When screening the market for bargain opportunities, investors may want to look for stocks whose trailing 12-month and forward price-earnings to growth (PEG) ratios are at or below 1.5 as of Jan. 21, which is the S&P 500's historical average PEG ratio.

The PEG ratio is calculated as the price-earnings ratio without non-recurring items divided by the five-year Ebitda growth rate. For financial stocks, the five-year book value growth rate is used instead.

The forward PEG ratio is calculated as the price-earnings ratio without NRI divided by the expected future earnings per share growth rate, which is a projection for the next five years based on analysts' estimates.

The four stocks listed below meet the above criteria. Wall Street has also issued positive recommendation ratings for these stocks, meaning that analysts expect higher share prices over the coming months.

Titan Machinery

The first company that makes the cut is Titan Machinery Inc. (

TITN, Financial), a West Fargo, North Dakota-based owner and operator of agricultural and construction equipment chain stores.

As of Jan. 21, Titan Machinery has a share price of $30.03, a price-earnings ratio of 15.24, a historical five-year Ebitda growth rate of 51.70% and an estimated future five-year earnings growth rate of 25%. Thus, the trailing 12-month PEG ratio is 0.29 and the forward PEG ratio is 0.61.

Since the share price has risen by 33.64% over the past year, the market capitalization now stands at $678.41 million and the 52-week range is $20.55 to $38.58.

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GuruFocus assigned a score of 6 out of 10 for the company's financial strength and 5 out of 10 for its profitability.

On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $41.67 per share.

CRA International

The second company that qualifies is CRA International Inc. (

CRAI, Financial), a Boston-based provider of economic, financial and management consulting services to businesses in the U.S. and internationally.

As of Jan. 21, CRA International has a share price of $86, a price-earnings ratio of 16.67, a historical five-year Ebitda growth rate of 27.80% and an estimated future five-year earnings growth rate of 15%. Thus, the trailing 12-month PEG ratio is 0.60 and the forward PEG ratio is 1.11.

Due to a 44.68% increase over the past year, the market capitalization is $638.73 million and the 52-week range is $52.09 to $116.71.

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GuruFocus assigned a score of 5 out of 10 for the company's financial strength and 7 out of 10 for its profitability.

On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $125 per share.

Koppers Holdings

The third company that qualifies is Koppers Holdings Inc. (

KOP, Financial), a Pittsburgh-based supplier of treated wood products and treatment chemicals as well as carbon compounds.

As of Jan. 21, Koppers Holdings has a share price of $29.97, a price-earnings ratio of 8.03, a historical five-year Ebitda growth rate of 34.20% and an estimated future five-year earnings per share growth rate of 18%. Thus, the trailing 12-month PEG ratio is 0.23 and the forward PEG ratio is approximately 0.45.

Following a 13.78% decline over the past year, the market capitalization is $638.55 million and the 52-week range is $27.91 to $39.44.

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GuruFocus assigned a score of 4 out of 10 for the company's financial strength and 7 out of 10 for its profitability.

On Wall Street, the stock has a median recommendation rating of buy with an average target price of $42.80 per share.

America's Car-Mart

The fourth company that qualifies is America's Car-Mart Inc. (

CRMT, Financial), a Rogers, Arkansas-based seller of older model used vehicles through more than 150 dealerships in the south and central regions of the United States.

As of Jan. 21, America's Car-Mart has a share price of $96.50, a price-earnings ratio of 6.05, a historical five-year Ebitda growth rate of 42.80% and an estimated future five-year earnings per share growth rate of 15.90%. Thus, the trailing 12-month PEG ratio is 0.14 and the forward PEG ratio is approximately 0.38.

Following a 20.43% decline over the past year, the market capitalization is $628.12 million and the 52-week range is $94.56 to $177.45.

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GuruFocus assigned a score of 5 out of 10 for the company's financial strength and 8 out of 10 for its profitability.

On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $149 per share.

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I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours. Click for the complete disclosure
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