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There are many different strategies to trade stocks and one of them is to find the companies with strong growth outlooks at discounted valuations. The growth outlooks and valuations can be evaluated using the following metrics:

(i) EPS Growth Projected This Quarter vs. Same Quarter Prior Year compares the current quarter's projection with the actual from the same quarter a year earlier. This criterion presents a real year-over-year growth number, and is a good indicator of the company's current annual growth rate.

(ii) Price-to-Earnings (P/E) ratio is a comparison of a company's current share price to its earnings per share during a specified time period. The higher the P/E ratio, the more the market is willing to pay for each dollar of annual earnings.

(NASDAQ:III) Price to Earnings Growth (NYSE:PEG) ratio is calculated by dividing a stock's forward P/E by its projected three- to five-year annual EPS growth rate. PEG Ratio is used to find companies that are trading at a discount to their projected growth. A lower PEG means that the stock is more undervalued.

(iv) Price-to-Sales ratio is calculated by dividing company's stock price by its sales per share for a specified period of time.

In this article, I will focus on the top 10 companies with strong growth at attractive valuations. Use this list as a potential starting point for your analysis. I have screened these 10 stocks based on the following criteria:

  • Security Type: Common Stock
  • Market Cap: greater than or equal to $1 billion
  • EPS Growth Projected This Quarter vs. Same Quarter Prior Year: Greater than or equal to 20
  • EPS Growth Projected This Year vs. Last Year: Greater than or equal to 20
  • This Year P/E Estimate: Less than or equal to 13
  • PEG Ratio: Less than or equal to 1
  • Price/Sales Ratio: Less than or equal to 1
  • 90-Day Average Volume: Greater than or equal to 3 million

The following table provides the top 10 stocks with strong growth:

(click to enlarge)

1. US AIRWAYS GROUP INC (LCC): US Airways Group is a holding company whose primary business activity is the operation of a network air carrier through its wholly owned subsidiaries, US Airways, Piedmont Airlines, Inc. (Piedmont), PSA Airlines, Inc. (NYSE:PSA), Material Services Company, Inc. (NYSEARCA:MSC) and Airways Assurance Limited (NASDAQ:AAL). US Airways Group has a market cap of $1.774 billion. US Airways Group is currently trading around $10.93 with a 52 week range of $3.96 to $11.21. The estimated P/E Ratio for the current year is 5 and its 90-day average trading volume is 8.1 million. Projected EPS growth for this quarter is 125% when compared to same quarter prior year. Projected EPS growth for this year is 222% when compared to last year. LCC has PEG ratio of 0.22 and Price-to-Sales ratio of 0.13. The stock has 113% price performance for the year 2012.

2. DELTA AIR LINES INC. (DAL): Delta Air Lines provides scheduled air transportation for passengers and cargo throughout the United States and around the world. The Company's route network gives it a presence in every domestic and international market. Delta Airlines has a market cap of $9.298 billion. Delta Airlines is currently trading around $11.03 with a 52 week range of $6.41 to $11.60. The estimated P/E Ratio for the current year is 4.9 and its 90-day average trading volume is 11.6 million. Projected EPS growth for this quarter is 84.88% when compared to same quarter prior year. Projected EPS growth for this year is 60.71% when compared to last year. DAL has PEG ratio of 0.41 and Price-to-Sales ratio of 0.26. The stock has 34.86% price performance for the year 2012.

3. JETBLUE AIRWAYS CORP (JBLU): JetBlue Airways Corporation is a passenger airline that operates primarily on point-to-point routes with its fleet of 120 Airbus A320 aircraft and 49 EMBRAER 190 aircraft. JetBlue has a market cap of $1.331 billion. JetBlue is currently trading around $4.7 with a 52 week range of $3.40 to $6.38. The estimated P/E Ratio for the current year is 9 and its 90-day average trading volume is 5.6 million. Projected EPS growth for this quarter is 96.25% when compared to same quarter prior year. Projected EPS growth for this year is 80% when compared to last year. JBLU has PEG ratio of 0.79 and Price-to-Sales ratio of 0.29. The stock has -9.04% price performance for the year 2012.

4. WESTERN DIGITAL CORP (WDC): Western Digital Corporation, through its subsidiaries, provides solutions for the collection, storage, management, protection, and use of digital content primarily audio and video worldwide. The company's principal product includes hard drives comprising 3.5-inch and 2.5-inch form factors. Western Digital has a market cap of $9.818 billion. Western Digital is currently trading around $40.74 with a 52 week range of $22.64 to $44.44. The estimated P/E Ratio for the current year is 5.1 and its 90-day average trading volume is 4.7 million. Projected EPS growth for this quarter is 216% when compared to same quarter prior year. Projected EPS growth for this year is 135% when compared to last year. WDC has PEG ratio of 0.45 and Price-to-Sales ratio of 0.95. The stock has 29.08% price performance for the year 2012.

5. NABORS INDUSTRIES LTD (NBR): Nabors Industries is a land drilling contractor. It is also a land well-servicing and workover contractor in the United States and Canada. Nabors Industries has a market cap of $4.500 billion. Nabors Industries is currently trading around $15.5 with a 52 week range of $11.05 to $28.50. The estimated P/E Ratio for the current year is 7 and its 90-day average trading volume is 7.4 million. Projected EPS growth for this quarter is 89.58% when compared to same quarter prior year. Projected EPS growth for this year is 57.77% when compared to last year. NBR has PEG ratio of 0.56 and Price-to-Sales ratio of 0.67. The stock has -12.05% price performance for the year 2012.

6. SOUTHWEST AIRLINES CO. (LUV): Southwest Airlines Co. engages in the operation of a passenger airline that provides scheduled air transportation in the United States. Southwest Airlines has a market cap of $6.218 billion. Southwest Airlines is currently trading around $8.1 with a 52 week range of $7.15 to $12.44. The estimated P/E Ratio for the current year is 12 and its 90-day average trading volume is 7.7 million. Projected EPS growth for this quarter is 80.67% when compared to same quarter prior year. Projected EPS growth for this year is 60.23% when compared to last year. LUV has PEG ratio of 0.99 and Price-to-Sales ratio of 0.39. The stock has -4.21% price performance for the year 2012.

7. KEY ENERGY SERVICES INC. (KEG): Key Energy Services provides a range of well services to major oil companies, foreign national oil companies and independent oil and natural gas production companies. Key Energy Services has a market cap of $1.783 billion. Key Energy Services is currently trading around $11.81 with a 52 week range of $8.27 to $20.77. The estimated P/E Ratio for the current year is 8.3 and its 90-day average trading volume is 3.2 million. Projected EPS growth for this quarter is 37.39% when compared to same quarter prior year. Projected EPS growth for this year is 55.05% when compared to last year. KEG has PEG ratio of 0.94 and Price-to-Sales ratio of 0.9. The stock has -24.18% price performance for the year 2012.

8. ADVANCED MICRO DEVICES INC (AMD): Advanced Micro Devices operates as a semiconductor company worldwide. The company designs, develops, and sells microprocessor products, such as central processing unit (CPU) and accelerated processing unit (NYSE:APU) for servers, desktop personal computers (PCS), and mobile devices. AMD has a market cap of $4.977 billion. AMD is currently trading around $6.78 with a 52 week range of $4.31 to $9.17. The estimated P/E Ratio for the current year is 9.2 and its 90-day average trading volume is 16.1 million. Projected EPS growth for this quarter is 58.89% when compared to same quarter prior year. Projected EPS growth for this year is 49.2% when compared to last year. AMD has PEG ratio of -0.79 and Price-to-Sales ratio of 0.73. The stock has 27.04% price performance for the year 2012.

9. TEXTRON INC. (TXT): Textron operates in the aircraft, defense, industrial, and finance businesses worldwide. Textron has a market cap of $6.791 billion. Textron is currently trading around $24.23 with a 52 week range of $14.66 to $29.18. The estimated P/E Ratio for the current year is 12.4 and its 90-day average trading volume is 3.3 million. Projected EPS growth for this quarter is 51.38% when compared to same quarter prior year. Projected EPS growth for this year is 49.24% when compared to last year. TXT has PEG ratio of 0.71 and Price-to-Sales ratio of 0.58. The stock has 30.83% price performance for the year 2012.

10. CATERPILLAR INC (CAT): Caterpillar manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. Caterpillar has a market cap of $62.259 billion. Caterpillar is currently trading around $95.44 with a 52 week range of $67.54 to $116.95. The estimated P/E Ratio for the current year is 9.8 and its 90-day average trading volume is 6.6 million. Projected EPS growth for this quarter is 52.83% when compared to same quarter prior year. Projected EPS growth for this year is 31.2% when compared to last year. CAT has PEG ratio of 0.69 and Price-to-Sales ratio of 0.98. The stock has 5.95% price performance for the year 2012.

Sources: Some of the data is sourced from Google Finance, Yahoo Finance and Fidelity.

Disclaimer: I am not a registered investment advisor and do not provide specific investment advice. The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. It is up to investors to make the correct decision after necessary research.

Source: 10 Stocks With Strong Growth And Attractive Valuations