When searching for opportunities among growing companies, investors could be interested in the following stocks since their share prices are trading near or below their Peter Lynch fair values.
The metric, which is based on the idea that the fair price-earnings ratio for a growing company is on par with its growth rate, is derived from the combination of the following components:
- The stock's price-earnings to growth ratio.
- The stock's five-year Ebitda growth rate.
- The stock's earnings per share without non-recurring items for the trailing 12 months through the most recent quarter.
On Thursday, MarineMax's shares closed at $47.21, below its Peter Lynch fair value of $445, for a price-to-Peter Lynch fair value ratio of about 0.11. This ranks better than 98% of the 204 companies that operate in the capital markets industry.
The stock has a market capitalization of $1.03 billion after the share price has increased by just 1.14% over the past year. The 52-week range is $40.64 to $70.89.
The stock has a median recommendation rating of overweight on Wall Street. The average target price is $64.60 per share.
The second stock that makes the cut is Johnson Outdoors Inc. (JOUT, Financial), a Racine, Wisconsin-based designer, manufacturer and marketer of camping, diving, personal watercraft and various marine electronics products.
On Thursday, Johnson Outdoors’ stock closed at $80.95, which is well below the Peter Lynch fair value per share of $140.84, yielding a price-to-Peter Lynch fair value ratio of approximately 0.57. This ranks better than 81% of the 86 companies that operate in the travel and leisure industry.
The stock has a market capitalization of $826.78 million following a 35.68% decline that occurred over the past year. The 52-week range is $80.14to $154.18.
The stock has one recommendation rating of buy on Wall Street and a target price of $170 per share.
Northern Technologies International
The third stock that qualifies is Northern Technologies International Corp. (NTIC, Financial), a Circle Pines, Minnesota-based supplier of specialty chemicals to several industries, including automotive, mechanical, military and oil and gas.
On Thursday, Northern Technologies International’s shares closed at $13.65, below its Peter Lynch fair value per share of $24.25, for a price-to-Peter Lynch fair value ratio of about 0.56. This ranks higher than 77% of the 459 companies that operate in the chemicals industry.
The stock has a market capitalization of $123.33 million following a 17.79% decrease over the past year. The 52-week range is $12.10 to $21.50.
The stock has one recommendation rating of buy with a target price of $24 per share on Wall Street.