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If you're looking for potentially undervalued stocks in rally mode, this may be an interesting starting point. To create this list, we started with a theoretical observation about P/E ratios. If the Price / Earnings Per Share ratio is equal to some constant k, it follows that there should be a linear relationship between Price and Earnings per Share. In other words:

If P/E = K
then P = (K)(E)

In other words, if there is a mismatch between growth rates in projected earnings per share values and price, a mis-pricing may have occurred, presenting an opportunity to value investors.

All of the stocks mentioned below have seen an increase in the current year EPS analyst projection over the last 30 days. For each of these stocks, the price change has lagged the change in EPS projections, indicating that these stocks may still have to price in some good news.

No, this approach isn't 100% accurate. There is no reason to believe that P/E should be equal to a constant at all times (that is, after all, a simplifying assumption to build a screen). But the goal here is to give you a starting point in finding potentially undervalued rally stocks. Full details below.

1. Goodyear Tire & Rubber Co. (NASDAQ:GT): Rubber & Plastics Industry. Over the last 30 days, the current year EPS consensus has increased by 94.55% (from $0.55 to $1.07), while price only increased by 15.21% (from $15.38 to $17.72). The stock is currently trading 2.76% above its SMA20, 11.68% above its SMA50, and 41.36% above its SMA200.

2. Hot Topic Inc. (NASDAQ:HOTT): Apparel Stores Industry. Over the last 30 days, the current year EPS consensus has increased by 55.56% (from $0.09 to $0.14), while price only increased by 11.54% (from $6.5 to $7.25). The stock is currently trading 1.04% above its SMA20, 15.27% above its SMA50, and 26.22% above its SMA200.

3. Delek US Holdings Inc. (NYSE:DK): Oil & Gas Refining & Marketing Industry. Over the last 30 days, the current year EPS consensus has increased by 53.52% (from $0.71 to $1.09), while price only increased by 14.67% (from $13.16 to $15.09). The stock is currently trading 9.23% above its SMA20, 12.96% above its SMA50, and 66.13% above its SMA200.

4. Danaos Corporation (NYSE:DAC): Shipping Industry. Over the last 30 days, the current year EPS consensus has increased by 42.86% (from $0.35 to $0.5), while price only increased by 12.42% (from $6.12 to $6.88). The stock is currently trading 3.37% above its SMA20, 11.16% above its SMA50, and 44.06% above its SMA200.

5. Ameristar Casinos Inc. (NASDAQ:ASCA): Resorts & Casinos Industry. Over the last 30 days, the current year EPS consensus has increased by 50.44% (from $1.13 to $1.7), while price only increased by 22.91% (from $18.68 to $22.96). The stock is currently trading 8.95% above its SMA20, 20.94% above its SMA50, and 32.79% above its SMA200.

6. Melco Crown Entertainment Ltd. (NASDAQ:MPEL): Resorts & Casinos Industry. Over the last 30 days, the current year EPS consensus has increased by 30.77% (from $0.13 to $0.17), while price only increased by 7.3% (from $9.72 to $10.43). The stock is currently trading 1.27% above its SMA20, 17.5% above its SMA50, and 56.32% above its SMA200.

7. Darling International Inc. (NYSE:DAR): Cleaning Products Industry. Over the last 30 days, the current year EPS consensus has increased by 36.28% (from $1.13 to $1.54), while price only increased by 14.48% (from $15.33 to $17.55). The stock is currently trading 10.26% above its SMA20, 15.1% above its SMA50, and 44.2% above its SMA200.

8. Akorn, Inc. (NASDAQ:AKRX): Generic Industry. Over the last 30 days, the current year EPS consensus has increased by 17.65% (from $0.17 to $0.2), while price only increased by 2.24% (from $6.69 to $6.84). The stock is currently trading 3.32% above its SMA20, 12.36% above its SMA50, and 33.83% above its SMA200.

9. HEALTHSOUTH Corp. (NYSE:HLS): Specialized Health Services Industry. Over the last 30 days, the current year EPS consensus has increased by 33.33% (from $1.05 to $1.4), while price only increased by 18.65% (from $23.65 to $28.06). The stock is currently trading 7.71% above its SMA20, 11.62% above its SMA50, and 32.31% above its SMA200.

10. IPG Photonics Corporation (NASDAQ:IPGP): Semiconductor Industry. Over the last 30 days, the current year EPS consensus has increased by 17.46% (from $1.89 to $2.22), while price only increased by 9.08% (from $63.23 to $68.97). The stock is currently trading 2.46% above its SMA20, 14.33% above its SMA50, and 83.57% above its SMA200.

11. Graco Inc. (NYSE:GGG): Diversified Machinery Industry. Over the last 30 days, the current year EPS consensus has increased by 17.65% (from $2.04 to $2.4), while price only increased by 11.06% (from $44.83 to $49.79). The stock is currently trading 2.82% above its SMA20, 10.08% above its SMA50, and 31.03% above its SMA200.

12. CARBO Ceramics Inc. (NYSE:CRR): Oil & Gas Equipment & Services Industry. Over the last 30 days, the current year EPS consensus has increased by 19.68% (from $4.32 to $5.17), while price only increased by 13.3% (from $134.26 to $152.12). The stock is currently trading 1.13% above its SMA20, 10.02% above its SMA50, and 45.24% above its SMA200.

13. Sun Hydraulics Corp. (NASDAQ:SNHY): Industrial Equipment & Components Industry. Over the last 30 days, the current year EPS consensus has increased by 22.22% (from $1.8 to $2.2), while price only increased by 17.89% (from $41.48 to $48.9). The stock is currently trading 5.81% above its SMA20, 11.62% above its SMA50, and 39.86% above its SMA200.

14. Kulicke & Soffa Industries Inc. (NASDAQ:KLIC): Semiconductor Equipment & Materials Industry. Over the last 30 days, the current year EPS consensus has increased by 48.92% (from $1.39 to $2.07), while price only increased by 46.18% (from $8.12 to $11.87). The stock is currently trading 11.71% above its SMA20, 24.61% above its SMA50, and 51.55% above its SMA200.

15. Polaris Industries, Inc. (NYSE:PII): Recreational Vehicles Industry. Over the last 30 days, the current year EPS consensus has increased by 17.77% (from $4.84 to $5.7), while price only increased by 15.15% (from $91.18 to $104.99). The stock is currently trading 0.53% above its SMA20, 12.79% above its SMA50, and 39.69% above its SMA200.

Analyst EPS estimates sourced from Yahoo Finance.

Source: 15 Rallying Stocks That Still Need to Price in Analyst Upgrades