Are you looking for mid-sized companies that still have room to grow? Looking for undervalued stocks? Do you prefer stocks that can bring in profits over the long term? If so, here are some interesting ideas for you.
The Price/Earnings ratio is one of the most commonly used price-multiple metrics. Often, EPS from the last four quarters is used to derive this number. A firm that has a high P/E ratio generally indicates that investors have high expectations of the firm relative to future earnings growth. By the opposite token, investors generally have lower expectations of a firm with a low P/E ratio. A firm that holds a P/E below 10 could be viewed as having "value investment" potential. One thing to remember is that EPS is an accounting measure that could be potentially manipulated. Thus the P/E is only as good as the quality of the earnings.
The PEG ratio (price/earnings to growth ratio) is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share [EPS], and the company's expected growth. In general, the P/E ratio is higher for a company with a higher growth rate. Thus using just the P/E ratio would make high-growth companies appear overvalued relative to others. It is assumed that by dividing the P/E ratio by the earnings growth rate, the resulting ratio is better for comparing companies with different growth rates. A lower ratio is 'better' (cheaper) and a higher ratio is 'worse' (expensive) - a PEG ratio of 1 means the company is fairly priced.
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. The 5-Year Expected EPS Growth Rate is a long term annual growth estimate, where the growth projections are made by analysts, the company or other credible sources.
We first looked for mid cap stocks. We then screened for businesses that are trading at a discount (P/E<10)(PEG Ratio < 1). Next, we then screened for businesses that are considered high-growth, with 5-year projected EPS growth above 25%. We did not screen out any sectors.
Do you think these mid-cap stocks are worth more than their current valuations? Please use our list to assist with your own analysis.
1) Dana Holding Corporation (NYSE:DAN)
Dana Holding Corporation has a Price/Earnings Ratio of 9.02 and Price/Earnings to Growth Ratio of 0.29 and 5-Year Projected Earnings Per Share Growth Rate of 31.56%. The short interest was 8.84% as of 05/24/2012. Dana Holding Corporation engages in the design, manufacture, and supply of driveline products, technologies, and service parts for vehicle manufacturers worldwide. It provides light axles, driveshafts, structural products, sealing products, thermal products, and related service parts for light trucks, sport utility vehicles, crossover utility vehicles, vans, and passenger cars. The company also offers axles, driveshafts, chassis and side rails, ride controls and related modules and systems, engine sealing products, thermal products, and related service parts for medium- and heavy-duty trucks, buses, and other commercial vehicles.
2) Harman International Industries Inc. (NYSE:HAR)
Harman International Industries Inc. has a Price/Earnings Ratio of 9.91 and Price/Earnings to Growth Ratio of 0.32 and 5-Year Projected Earnings Per Share Growth Rate of 31.00%. The short interest was 2.38% as of 05/24/2012. Harman International Industries, Incorporated engages in the development, manufacture, and marketing of audio products and electronic systems primarily in the United States, Germany, and other parts of Europe. Its Automotive segment offers audio, electronic, and infotainment systems for vehicle applications to be installed primarily as original equipment by automotive manufacturers under the JBL, Infinity, Mark Levinson, Harman/Kardon, Logic 7, Lexicon, and Becker brand names. This segment also develops, manufactures, sells, and services audio systems under the Bowers & Wilkins brand name; and produces Harman/Kardon branded infotainment systems for Harley-Davidson touring motorcycles. The company's Consumer segment provides a range of audio and consumer electronics for home, multimedia, and mobile applications under the AKG, Harman/Kardon, Infinity, JBL, Mark Levinson, and Selenium brand names.
3) Oil States International Inc. (NYSE:OIS)
|Industry:||Oil & Gas Equipment & Services|
Oil States International Inc. has a Price/Earnings Ratio of 9.71 and Price/Earnings to Growth Ratio of 0.25 and 5-Year Projected Earnings Per Share Growth Rate of 38.80%. The short interest was 5.13% as of 05/24/2012. Oil States International, Inc., through its subsidiaries, provides specialty products and services to the oil and gas drilling and production companies worldwide. It operates in four segments: Accommodations, Offshore Products, Well Site Services, and Tubular Services. The Accommodations segment offers temporary and permanent work force accommodation services for people working in remote locations.
*Company profiles were sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.