Seeking Alpha
Profile| Send Message| ()  

By Renee O'Farrell

When a company's earnings are estimated to increase by an average of more than 25% a year over the next five years, it's a beautiful thing - but when that company is priced at less than 10 times its forward earnings, it is even better. Here is a list of four stocks that fit the bill perfectly. Companies like Facebook (FB) may be getting all the press lately, but these undervalued, high-growth gems really do deserve a second look.

Marathon Petroleum Corporation (MPC) is an oil & gas refining & marketing company, with a $11.88 billion market cap. Right now, it is trading at $35 a share, up over 6% year to date. The company pays a 2.87% dividend yield and is priced at just 5.61 times its forward earnings. Consensus estimates put Marathon's earnings growing at an average rate of 32.75% a year over the next five years. Barry Rosenstein's Jana Partners is a big fan of the company. Marathon was the fund's largest position at the end of 2011 (check out Jana Partners' portfolio here).

Halliburton Company (HAL) is an oil & gas equipment & services company, with a $27.69 billion market cap. It is currently trading at $29.82 a share, or at 7.56 times its forward earnings. The company pays a 1.20% dividend yield. Analysts are predicting that Halliburton's earnings per share will increase by an average of 25% a year over the next five years. Rob Citrone's Discovery Capital Management is a fan of the company. It increased its position in Halliburton by 45% during the fourth quarter, bringing its total stake in the company to $72.52 million, or roughly 2% of the fund's portfolio.

Newmont Mining Corp (NEM) is a gold and copper company. It has a $22.43 billion market cap and is trading at $45.48 a share. At this price, the company is trading at 8.20 times its forward earnings, with a dividend yield of 3.09%. The consensus is that Newmont's earnings will increase by 42.51% per annum on average over the next five years. First Eagle Investment Management had a massive stake in Newmont at the end of the fourth quarter. The fund held almost 2% or just under $411 million in the stock at the end of December.

Textron Inc (TXT) is a major diversified aerospace and defense company with a $6.23 billion market cap. It is currently trading at $22.35 a share and is priced at 9.62 times its forward earnings. The company pays a small 0.36% dividend yield. Analysts say the company's earnings will increase by 35.33% a year on average over the next five years. During the fourth quarter, several funds initiated new positions in Textron, including Doug Silverman's Senator Investment Group, Bruce Kovner's Caxton Associates Lp, Richard Schimel's Diamondback Capital and Glenn Russell Dubin's Highbridge Capital Management.

Source: 4 Undervalued High Growth Stocks