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.
This metric, which is based on the idea 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 company's earnings per share without non-recurring items for the trailing 12 months through the most recent quarter.
B2Gold
The first stock that meets the criteria is B2Gold Corp. (BTG, Financial), a Vancouver, Canada-based gold producer holding mineral properties in Mali, the Philippines, Namibia and Nicaragua.
On Friday, B2Gold’s shares closed at $3.33, below its Peter Lynch fair value of $9.75, for a price-to-Peter Lynch fair value ratio of about 0.34. This ranks better than 67.63% of the 207 companies that operate in the metals and mining industry.
The stock has a market capitalization of $3.54 billion after the share price has decreased by 15.70% over the past year. The 52-week range is $3.16 to $5.07.
The stock has a median recommendation rating of buy on Wall Street. The average target price is $6.16 per share.
ConocoPhillips
The second stock that makes the cut is ConocoPhillips (COP, Financial), a Houston-based energy company that produces oil and gas from unconventional deposits in North America and from conventional deposits in North America, Europe, Asia and Oceania. ConocoPhillips’ portfolio includes numerous liquefied natural gas facilities and mining activities at oil sands facilities located in Canada.
On Friday, ConocoPhillips’ stock closed at $86.46, which was well below the Peter Lynch fair value per share of $186.53, yielding a price-to-Peter Lynch fair value ratio of approximately 0.46. That's better than 65.81% of 155 companies that operate in the oil and gas industry.
The stock has a market capitalization of $111.83 billion following a 44.58% increase that occurred over the past year. The 52-week range is $51.41 to $124.08.
The stock has a median recommendation rating of overweight on Wall Street and an average target price of $130.42 per share.
PagSeguro Digital
The third stock that qualifies is PagSeguro Digital Ltd. (PAGS, Financial), a Brazilian provider of financial technology solutions and services to micro, small and medium-sized merchants in Brazil and internationally
On Friday, PagSeguro Digital's shares closed at $10.89, below its Peter Lynch fair value per share of $17.95, for a price-to-Peter Lynch fair value ratio of about 0.61. This ratio ranks higher than that of 85.32% of the 613 companies that operate in the software industry.
The stock has a market capitalization of $3.57 billion following a 78.96% decrease over the past year. The 52-week range is $9.45 to $61.65.
The stock has a median recommendation rating of overweight with an average target price of about $22 per share on Wall Street.
