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A Trio of Stocks Trading Below the Peter Lynch Earnings Line

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GuruFocus.com
·3 min read
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- By Alberto Abaterusso

Value investors should take the time to have a look at the following securities, as their share prices are trading below the Peter Lynch earnings line, indicating possible value opportunities.

These stocks also received positive recommendation ratings from sell-side analysts on Wall Street.

Sanofi SA


The first stock to consider is Sanofi SA (NASDAQ:SNY), a French drug manufacturer.

The below chart shows that the share price ($50.62 at close on Dec. 2) is currently trading below the Peter Lynch earnings line ($74.60 as of June 28), which determines a margin safety of 32.14%.

A Trio of Stocks Trading Below the Peter Lynch Earnings Line
A Trio of Stocks Trading Below the Peter Lynch Earnings Line

The stock price increased by nearly 9% over the past year through Wednesday for a market capitalization of $127.06 billion and a 52-week range of $37.62 to $55.

Wall Street sell-side analysts forecast that the share price will continue trading up, eventually hitting the average target price of $60.90 per share, which would mark a 20.3% growth from Wednesday's closing price. These analysts have assigned an overweight recommendation rating to the stock.

GuruFocus has assigned a score of 6 out of 10 to the financial strength of the company and 7 out of 10 to the profitability.

Dodge & Cox leads the group of the company's top fund holders, owning 1.57% of shares outstanding. It is followed by Ken Fisher with 0.74% of shares outstanding and FMR LLC with 0.73% of shares outstanding.

UBS Group AG

The second stock to consider is UBS Group AG (NYSE:UBS), a Swiss diversified bank giant.

The below chart shows that the stock price ($14.54 per share as of Dec. 2) is trading below the Peter Lynch earnings line ($22.65 as of Sept. 28), yielding a margin safety of 35.8%.

A Trio of Stocks Trading Below the Peter Lynch Earnings Line
A Trio of Stocks Trading Below the Peter Lynch Earnings Line

The stock price performed well over the past year through Wednesday, gaining 21.7%, which determined a market capitalization of $51.4 billion and a 52-week range of $7.48 to $14.78.

Wall Street sell-side analysts predict that the stock price will continue to trade higher over the next 12 months, gaining nearly 7% from Wednesday's closing to reach the average target price of $15.54 per share.

GuruFocus has assigned a score of 3 out of 10 to the financial strength of the company and a score of 4 out of 10 to the profitability.

MASSACHUSETTS FINANCIAL SERVICES CO /MA/ leads the group of the company's top fund holders, owning 3.89% of shares outstanding. It is followed by UBS Group AG with 3.5% of shares outstanding and CREDIT SUISSE AG/ with 3.35% of shares outstanding.

Orange SA

The third stock to consider is Orange SA (NYSE:ORAN), a French telecommunications operator serving consumers, businesses, organizations and institutions in Europe, Africa and the Middle East.

The below chart illustrates that the stock price ($12.98 per share at close on Dec. 2) stands below the Peter Lynch earnings line ($16.41 as of June 28), which yields a margin safety of 21%.

A Trio of Stocks Trading Below the Peter Lynch Earnings Line
A Trio of Stocks Trading Below the Peter Lynch Earnings Line

The stock price lost 14.42% over the past year through Wednesday, causing the market capitalization to go down to $34.48 billion and determining a 52-week range of $9.93 to $16.58.

Wall Street sell-side analysts forecast that the share price will rebound, gaining 24.2% up to the average target of $16.12 within 52 weeks. They have recommended an overweight rating for this stock.

GuruFocus has assigned a score of 6 out of 10 to both the company's financial strength rating and its profitability rating.

MORGAN STANLEY dominates the group of the company's top fund holders with 0.12% of shares outstanding. NORTHERN TRUST CORP and MANAGED ASSET PORTFOLIOS, LLC follow with 0.07% of shares outstanding each.

Disclosure: I have no position in any security mentioned.

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This article first appeared on GuruFocus.