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3 Stocks Trading Below the Peter Lynch Earnings Line

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- By Alberto Abaterusso

Value investors could be interested in the following three stocks, since their share prices are trading below their respective Peter Lynch earnings lines. This suggests they could be undervalued.

Wall Street sell-side analysts have also issued positive ratings for these companies.

Synchrony Financial


The first stock investors could be interested in is Synchrony Financial (NYSE:SYF), a Stamford, Connecticut-based credit services company focusing on financial products and services for U.S. consumers.

The chart illustrates that the share price ($44.13 at close on May 12) is currently trading below the Peter Lynch earnings line ($53.25).

3 Stocks Trading Below the Peter Lynch Earnings Line
3 Stocks Trading Below the Peter Lynch Earnings Line

The stock has risen 158.52% over the past year through Wednesday for a market capitalization of $25.67 billion and a 52-week range of $15.17 to $47.22.

The stock has a median recommendation rating of buy with a target price of $50.35, which reflects a 14% upside from Wednesday's closing price. Earnings per share are also projected to go up by approximately 3% every year over the next five years.

GuruFocus has assigned a score of 3 out of 10 to the company's financial strength and 5 out of 10 to its profitability.

Vanguard Group Inc leads the group of top fund holders of the company, owning 10.72% of shares outstanding. It is followed by Capital World Investors with 8.69% and BlackRock Inc. with 7.08%.

Apollo Global Management Inc

The second stock investors could be interested in is Apollo Global Management Inc (NYSE:APO), a New York-based asset management firm serving individual and institutional investors, including endowment and sovereign wealth funds.

The chart shows that the share price ($55.76 as of May 12) is currently standing below the Peter Lynch earnings line ($114.15).

3 Stocks Trading Below the Peter Lynch Earnings Line
3 Stocks Trading Below the Peter Lynch Earnings Line

The stock has increased by 33.5% over the past year through Wednesday, determining a market capitalization of $12.95 billion and a 52-week range of $36.35 to $58.49.

Wall Street sell-side analysts have recommended a median rating of overweight for this stock, meaning that its shares are expected to outperform either the industry or the entire market. The average target price of $61.07 mirrors a 9.5% upside from Wednesday's closing price. Also, analysts forecast that the trailing 12-month earnings per share will go up by about 31% every year over the next five years.

GuruFocus has assigned a score of 3 out of 10 to the company's financial strength and 7 out of 10 to its profitability.

Chase Coleman (Trades, Portfolio) is the largest fund holder of the company, as the investor owns 15.21% of total shares outstanding. Vanguard Group and Capital World Investors are following with 7.90% and 5.35%, respectively.

The Hartford Financial Services Group Inc

The third stock investors could be interested in is The Hartford Financial Services Group Inc (NYSE:HIG), a Hartford, Connecticut-based insurer and financial services provider in the U.S. and overseas.

The chart exhibits that currently, the share price ($63.38 at close on May 12) is still trading below the Peter Lynch earnings line ($70.35).

3 Stocks Trading Below the Peter Lynch Earnings Line
3 Stocks Trading Below the Peter Lynch Earnings Line

The stock has risen by 90.33% over the past year through Wednesday, which determined a market capitalization of $22.64 billion and a 52-week range of $30.26 to $69.94.

Wall Street projects that this stock will add 18.5% within 12 months as sell-side analysts have established an average target price of $75.07. The stock has a median recommendation rating of overweight, which means that it is also expected to beat either the industry or the whole market. The trailing 12-month earnings per share is anticipated to go up every year over the next five years according to a growth rate of 7.2%.

GuruFocus has assigned a score of 4 out of 10 to the financial strength and of 5 out of 10 to the profitability of the company.

Vanguard Group is the largest fund holder with 10.85% of shares outstanding. It is followed by BlackRock with 6.89% and JPMorgan Chase & Co with 5.70%.

Disclosure: I have no positions in any securities mentioned.

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This article first appeared on GuruFocus.