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Gurus' Stocks Trading Below Peter Lynch's Fair Value

Undervalued stocks with wide margins of safety

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Jul 13, 2016
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According to GuruFocus' All-in-One Screener, several gurus are focusing on stocks whose Peter Lynch fair value is far above the current price. The following stocks are trading with wide margins of safety and at least five gurus are shareholders.

Lincoln National Corp. (LNC) is trading at about $39 per share, and the Peter Lynch fair value gives the stock a fair price of $62.37, giving investors a margin of safety of 37%.

The stock is trading with a PE ratio of 9.46, higher than 67% of companies in the Global Insurance – Life industry and is 33.54% below its 52-week high and 30.14% above its 52-week low. The PS ratio is 0.74, and the forward PE is 6.16.

Pioneer Investments (Trades, Portfolio) is the largest shareholder among the gurus with a stake of 0.53% of outstanding shares followed by

Jeremy Grantham (Trades, Portfolio) with 0.28%, Ray Dalio (Trades, Portfolio) with 0.08%, John Keeley (Trades, Portfolio) with 0.02% and Paul Tudor Jones (Trades, Portfolio) with 0.01%.

Apple Inc. (AAPL) is trading at about $96.98 per share, and the Peter Lynch fair value gives the stock a fair price of $135, giving investors a margin of safety of 28%.

The stock is trading with a PE ratio of 10.75, higher than 75% of companies in the Global Consumer Electronics industry and is 29.62% below its 52-week high and 4.60% above its 52-week low. The PS ratio is 2.35, and the forward PE is 10.7.

The company designs, manufactures and markets mobile communication and media devices, personal computers and portable digital music players and sells a variety of related software, services, accessories, networking solutions and third-party digital content.

The company is held by 25 gurus. 

Ken Fisher (Trades, Portfolio) is the largest shareholder among the gurus with a stake of 0.21% of outstanding shares, followed by Spiros Segalas (Trades, Portfolio) with 0.21%, Warren Buffett (Trades, Portfolio) with 0.18%, Pioneer Investments (Trades, Portfolio) with 0.16%, David Einhorn (Trades, Portfolio) with 0.15%, Grantham with 0.13% and Chase Coleman (Trades, Portfolio) with 0.1%.

Reynolds American Inc. (RAI) is trading at about $53 per share, and the Peter Lynch fair value gives the stock a fair price of $71.3, giving investors a margin of safety of 25%.

The stock is trading with a PE ratio of 11.21, higher than 84% of companies in the Global Tobacco industry and is 0.55% below its 52-week high and 46.38% above its 52-week low. The PS ratio is 6.6, and the forward PE is 22.68.

The company through its subsidiaries manufactures cigarettes and other tobacco products in the U.S. The company's brands include Camel, Pall Mall and Winston among others.

The stock is part of eight gurus' portfolios: Barrow, Hanley, Mewhinney & Strauss is the main shareholder among the gurus with a stake of 0.54% of outstanding shares followed by Pioneer Investments (Trades, Portfolio) with 0.42%,

David Winters (Trades, Portfolio) with 0.14%, Wintergreen Fund (Trades, Portfolio) with 0.12%, Grantham with 0.09% and MS Global Franchise Fund (Trades, Portfolio) with 0.04%.

Ameriprise Financial Inc. (AMP) is trading at about $91 per share, and the Peter Lynch fair value gives the stock a fair price of $127.33, giving investors a margin of safety of 28%.

The stock is trading with a PE ratio of 10.8, higher than 68% of companies in the Global Asset Management industry and is  33.68% below its 52-week high and 12.76% above its 52-week low. The PS ratio is 1.4, and the forward PE is 9.58.

The company through its subsidiaries is engaged in providing financial planning, products and services as solutions for its clients' cash and liquidity, asset accumulation, income, protection and estate and wealth transfer needs.

The stock is part of 10 gurus' portfolios: Barrow, Hanley, Mewhinney & Strauss is the main shareholder among the gurus with a stake of 1.7% of outstanding shares, followed by

T Rowe Price Equity Income Fund (Trades, Portfolio) with 1.54%, Jim Simons (Trades, Portfolio) with 0.13%, First Pacific Advisors (Trades, Portfolio) with 0.05%, Mario Gabelli (Trades, Portfolio) with 0.02% and Jones with 0.02%.

Mondelez International Inc. Class A (MDLZ) is trading at about $45 per share, and the Peter Lynch fair value gives the stock a fair price of $69.34, giving investors a margin of safety of 34%.

The stock is trading with a PE ratio of 9.88 that is higher than 82% of companies in the Global Confectioners industry and is 13.85% below its 52-week high and 16.64% above its 52-week low. The PS ratio is 2.60, and the forward PE is 24.94.

The company manufactures confectionery products. It produces packaged food products including biscuits, confectionery, beverages, cheese, convenient meals and various packaged grocery products.

The stock is part of 11 gurus' portfolios:

Bill Ackman (Trades, Portfolio) is the main shareholder among the gurus with a stake of 1.48% of outstanding shares, followed by Gabelli with 0.18%, Simons with 0.1%, Steven Cohen (Trades, Portfolio) with 0.07%, RS Investment Management (Trades, Portfolio) with 0.06%, Pioneer Investments (Trades, Portfolio) with 0.06%, George Soros (Trades, Portfolio) with 0.05% and MS Global Franchise Fund (Trades, Portfolio) with 0.04%.

Polaris Industries Inc. (PII) is trading at about $86.23 per share, and the Peter Lynch fair value gives the stock a fair price of $92.4, giving investors a margin of safety of 7%.

The stock is trading with a PE ratio of 14, higher than 52% of companies in the Global Recreational Vehicles industry and is 48.71% below its 52-week high and 18.27% above its 52-week low. The PS ratio is 1.25, and the forward PE is 13.8.

The company designs, engineers and manufactures off-road vehicles, which includes all-terrain vehicles and side-by-side vehicles for recreational and utility use, snowmobiles, and motorcycles.

The stock is part of five gurus' portfolios:

Columbia Wanger (Trades, Portfolio) is the main shareholder among the gurus with a stake of 1.93% of outstanding shares, followed by Fisher with 0.35%, Meridian Funds (Trades, Portfolio) with 0.23% and Mairs and Power (Trades, Portfolio) with 0.01%.

Disclosure: I do not own any shares of any stocks mentioned in this article.

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