3 Stocks Trading Below the Peter Lynch Fair Value
- By Alberto Abaterusso
Investors in search of opportunities amid growing companies could be interested in the following three stocks, as their share prices are trading lower than their Peter Lynch Fair Values.
The Peter Lynch Fair Value, which is based on the idea that the fair price-earnings (PE) ratio for a growing company matches its growth rate, derives from the combination of the following three components:
The stock's PEG ratio.
The stock's five-year Ebitda growth rate.
The stock's earnings per share (EPS) without non-recurring items (NRI) for the trailing twelve months (TTM) through the most recent quarter.
The Hartford Financial Services Group Inc
The first stock that qualifies is The Hartford Financial Services Group Inc (NYSE:HIG), a Hartford, Connecticut-based insurer and financial services provider in the U.S. and overseas.
On Tuesday, The Hartford Financial Services Group Inc's share price closed at $51.87, significantly below its Peter Lynch Fair Value per share of $119.05, for a price-to-Peter-Lynch-Fair-Value ratio of 0.44. This ranks higher than 84% of the 82 companies that operate in the insurance industry.
The stock has a market capitalization of $18.54 billion after a 6.15% decrease that took place over the past year. The 52-week range is $19.04 to $55.89.
The stock has a GuruFocus financial strength rating of 4 out of 10 and a profitability rating of 5 out of 10.
As of February, the stock has a median recommendation rating of buy on Wall Street. The average target price is $57.94 per share.
Quidel Corp
The second stock that qualifies is Quidel Corp (NASDAQ:QDEL), a San Diego, California-based global manufacturer of diagnostic testing solutions for applications in several medical fields including infectious diseases, cardiology, gastrointestinal diseases and toxicology.
On Tuesday, Quidel Corp's share price closed at $167.42, well below the Peter Lynch Fair Value per share of $464.75, determining a price-to-Peter-Lynch-Fair-Value ratio of 0.36. This ranks higher than 96% of the 46 companies that operate in the medical diagnostics and research industry.
The stock has a market capitalization of $7.09 billion after a 115.36% increase that happened over the past year. The 52-week range is $72.99 to $306.72.
The stock has a GuruFocus financial strength rating of 8 out of 10 and a profitability rating of 5 out of 10.
As of February, the stock has a median recommendation rating of overweight on Wall Street and an average target price of $258.20 per share.
Toll Brothers Inc
The third stock that qualifies is Toll Brothers Inc (NYSE:TOL), a Fort Washington, Pennsylvania-based designer and builder of detached and attached homes in luxury residential communities in several states of the U.S.
On Tuesday, Toll Brothers Inc's share price closed at $54.23, significantly below its Peter Lynch Fair Value per share of $67.65, for a price-to-Peter-Lynch-Fair-Value ratio of about 0.80. This ranks higher than 42% of the 43 companies that operate in the homebuilding and construction industry.
The stock has a market capitalization of $6.66 billion after a 22.44% increase that occurred over the past year. The 52-week range is $13.28 to $56.96.
The stock has a GuruFocus financial strength rating of 5 out of 10 and a profitability rating of 7 out of 10.
As of February, the stock has a median recommendation rating of hold on Wall Street. The average target price is $51.64 per share.
Disclosure: I have no position in any security mentioned.
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This article first appeared on GuruFocus.
