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, 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 of the five-year Ebitda growth rate.
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.
Sportsman's Warehouse Holdings Inc.
The first company that makes the cut is Sportsman's Warehouse Holdings Inc. (SPWH, Financial), a West Jordan, Utah-based retailer of outdoor sporting products in the U.S.
As of Feb. 24, Sportsman's Warehouse Holdings Inc. has a share price of $10.98, a price-earnings ratio of 6.17, a historical five-year Ebitda growth rate of 6.60% and an estimated future five-year earnings growth rate of 20.72%. Thus, the trailing 12-month PEG ratio is 0.93 and the forward PEG ratio is 0.30.
Since the share price has dropped by 35.2% over the past year, the market capitalization now stands at $481.80 million and the 52-week range is $9.73 to $18.05.
GuruFocus assigned a score of 6 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 $16.25 per share.
Farmers National Banc Corp
The second company that qualifies is Farmers National Banc Corp. (FMNB, Financial), a Canfield, Ohio-based regional bank providing banking and various financial services.
As of Feb. 24, Farmers National Banc Corp. has a share price of $17, a price-earnings ratio of 9.44, a historical five-year book value growth rate of 11% and an estimated future five-year earnings growth rate of 18%. Thus, the trailing 12-month PEG ratio is 0.86 and the forward PEG ratio is 0.52.
Due to a 22.83% increase over the past year, the market capitalization is $576.27 million and the 52-week range is $13.79 to $20.
GuruFocus assigned a score of 5 out of 10 for the company's financial strength and 6 out of 10 for its profitability.
On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $21 per share.
Haverty Furniture Companies Inc.
The third company that qualifies is Haverty Furniture Companies Inc. (HVT, Financial), an Atlanta, Georgia-based operator of 120 showrooms in 16 states in the southern and midwestern United States for the sale of home furniture and home accessories.
As of Feb. 24, Haverty Furniture Companies Inc. has a share price of $27.42, a price-earnings ratio of 5.58, a historical five-year Ebitda growth rate of 9% and an estimated future five-year earnings per share growth rate of 13.10%. Thus, the trailing 12-month PEG ratio is 0.62 and the forward PEG ratio is approximately 0.43.
Following a 24.2% decline over the past year, the market capitalization is $488.07 million and the 52-week range is $26.36 to $52.84.
GuruFocus assigned a score of 6 out of 10 for the company's financial strength and 6 out of 10 for its profitability.
On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $64 per share.
North American Construction Group Ltd
The fourth company that qualifies is North American Construction Group Ltd (NOA, Financial), a Canadian supplier of equipment maintenance, mining and heavy construction services to operators in the oil and gas industry of North America and Australia.
As of Feb. 24, North American Construction Group Ltd has a share price of $14.58, a price-earnings ratio of 11.31, a historical five-year Ebitda growth rate of 31.90% and an estimated future five-year earnings per share growth rate of 11%. Thus, the trailing 12-month PEG ratio is 0.35 and the forward PEG ratio is approximately 1.03.
Following a 22% increase over the past year, the market capitalization is $417.16 million and the 52-week range is $10.29 to $17.79.
GuruFocus assigned a score of 4 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 buy with an average target price of $27 per share.
