.jpg)
When screening the market for bargain opportunities, investors may want to look for stocks whose trailing 12-month and forward price-earnings to growth ratios are around 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.
JPMorgan Chase
The first company that makes the cut is JPMorgan Chase & Co. (JPM, Financial), a U.S. bank major.
As of April 5, JPMorgan Chase has a share price of $133.34, a price-earnings ratio of 8.57, a historical five-year book value growth rate of 6.70% and an estimated future five-year earnings growth rate of 7.21%. Thus, the trailing 12-month PEG ratio is 0.28 and the forward PEG ratio is 1.19.
Since the share price has dropped by 15.14% over the past year, the market capitalization now stands at $386.20 billion and the 52-week range is $127.27 to $172.96.
GuruFocus assigned a score of 4 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 $166.05 per share.
Home Depot
The second company that qualifies is The Home Depot Inc. (HD, Financial), an Atlanta-based operator of home improvement retail stores in North America and Mexico.
As of April 5, Home Depot has a share price of $304.86, a price-earnings ratio of 19.05, a historical five-year Ebitda growth rate of 13.30% and an estimated future five-year earnings growth rate of 14.60%. Thus, the trailing 12-month PEG ratio is 1.43 and the forward PEG ratio is 1.30.
Due to a 5.40% decline over the past year, the market capitalization is $305.55 billion and the 52-week range is $295.01 to $420.61.
GuruFocus assigned a score of 5 out of 10 for the company's financial strength and 10 out of 10 for its profitability.
On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $383.17 per share.
Novartis
The third company that meets the criteria is Novartis AG (NVS, Financial), a Basel, Switzerland-based drug giant.
As of April 5, Novartis has a share price of $88.17, a price-earnings ratio of 8.45, a historical five-year Ebitda growth rate of 11.80% and an estimated future five-year earnings per share growth rate of 5.24%. Thus, the trailing 12-month PEG ratio is 0.72 and the forward PEG ratio is approximately 1.61.
Following a 4.35% increase over the past year, the market capitalization is $202.74 billion and the 52-week range is $79.09 to $95.17.
GuruFocus assigned a score of 7 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 hold with an average target price of $95.45 per share.
United Parcel Service
The fourth company is United Parcel Service Inc (UPS, Financial), an Atlanta-based provider of correspondence and parcel delivery as well as freight and logistics services.
As of April 5, United Parcel Service has a share price of $197.21, a price-earnings ratio of 13.27, a historical five-year Ebitda growth rate of 8.80% and an estimated future five-year earnings per share growth rate of 14.03%. Thus, the trailing 12-month PEG ratio is 1.51 and the forward PEG ratio is approximately 0.95.
Following a 13.35% increase over the past year, the market capitalization is $169.68 billion and the 52-week range is $171.2 to $233.72.
GuruFocus assigned a score of 6 out of 10 for the company's financial strength and 9 out of 10 for its profitability.
On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $244.81 per share.
Become a Premium Member to See This: (Free Trial):
