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Mid-cap companies offer investors an exciting opportunity. They aren't quite large caps, so they still have room to grow, and they offer some of the possible high rewards of their riskier, smaller cap peers. Today, we focus on industrial companies in the mid-cap range that look undervalued from a price-multiple perspective. We further focus on companies with high analyst ratings. The list our screen produced is rather interesting.

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.

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 company 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 company with a low P/E ratio. A company 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.

We first looked for mid cap industrial stocks. From here, we then looked for companies that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3). We next screened for businesses that are trading at a discount when considering the company growth rate (PEG Ratio < 1)(P/E<10).

Do you think these mid-cap stocks should be priced higher? Use this list as a starting-off point for your own analysis.

1) Timken Co. (NYSE:TKR)

Sector:Industrial Goods
Industry:Machine Tools & Accessories
Market Cap:$4.49B
Beta:2.10

Timken Co. has an Analysts' Rating of 1.50 and Price/Earnings to Growth Ratio of 0.73 and Price/Earnings Ratio of 9.14. The short interest was 1.58% as of 06/05/2012. The Timken Company develops, manufactures, markets, and sells anti-friction bearings and assemblies, alloy steels, and mechanical power transmission systems. It operates through four segments: Mobile Industries, Process Industries, Aerospace and Defense, and Steel.

The Mobile Industries segment provides bearings, mechanical power transmission components, drive- and roller-chains, augers, and related products and services to original equipment manufacturers (OEMs) and suppliers of passenger cars, light trucks, medium and heavy-duty trucks, rail cars, locomotives, and agricultural, construction, and mining equipment, as well as to automotive and heavy truck aftermarket distributors. The Process Industries segment offers bearings, mechanical power transmission components, industrial chains, and related products and services to OEMs and suppliers of power transmission, energy, and heavy industries machinery and equipment.

2) Kennametal Inc. (NYSE:KMT)

Sector:Industrial Goods
Industry:Machine Tools & Accessories
Market Cap:$2.70B
Beta:1.66

Kennametal Inc. has an Analysts' Rating of 2.10 and Price/Earnings to Growth Ratio of 0.69 and Price/Earnings Ratio of 8.98. The short interest was 3.31% as of 06/05/2012. Kennametal Inc. manufactures and supplies tooling, engineered components, and advanced materials consumed in production processes worldwide. It offers various metal working products, including milling, turning tooling, hole-making and finishing, and tooling systems; and energy, mining, metallurgical, construction, and agriculture equipment, as well as various solutions for aggregates applications.

The company also provides various advanced materials comprising abrasive flow products, ceramic material solutions, HIP products, international specialty alloys, and tricon metals; deburring and surface finishing solutions to the manufacturing industry; wear components products, including engineered wear products, rod and insert blanks, extrude hones, and conforma clads; and saw mill products.

3) Gardner Denver Inc. (NYSE:GDI)

Sector:Industrial Goods
Industry:Diversified Machinery
Market Cap:$2.64B
Beta:1.37

Gardner Denver Inc. has a Analysts' Rating of 2.00 and Price/Earnings to Growth Ratio of 0.67 and Price/Earnings Ratio of 9.98. The short interest was 6.61% as of 06/05/2012. Gardner Denver, Inc. designs, manufactures, and markets engineered industrial machinery and related parts and services primarily in North America, Europe, Asia, South America, Africa, and Australia.

The company operates in two segments, Industrial Products Group and Engineered Products Group. The Industrial Products Group segment offers rotary screw, reciprocating, and sliding vane air and gas compressors; positive displacement, centrifugal, and side channel blowers; and vacuum pumps for use in manufacturing, transportation and general industry, and original equipment manufacturer (OEM) and engineered system applications.

4) Joy Global, Inc. (NYSE:JOY)

Sector:Industrial Goods
Industry:Farm & Construction Machinery
Market Cap:$5.94B
Beta:2.14

Joy Global, Inc. has an Analysts' Rating of 2.10 and Price/Earnings to Growth Ratio of 0.52 and Price/Earnings Ratio of 8.93. The short interest was 5.37% as of 06/05/2012. Joy Global Inc. engages in the manufacture and servicing of mining equipment for the extraction of coal, copper, iron ore, oil sands, and other minerals.

The company operates in two segments: Underground Mining Machinery and Surface Mining Equipment. The Underground Mining Machinery segment produces continuous miners, longwall shearers, powered roof supports, armored face conveyors, shuttle cars, flexible conveyor trains, roof bolters, battery haulers, continuous haulage systems, feeder breakers, conveyor systems, high angle conveyors, and crushing equipment, as well as rebuilds and services equipment; and sells replacement parts and consumables in support of installed base.

*Company profiles were sourced from Finviz. Financial data was sourced from Yahoo Finance.

Source: 4 Low Priced Mid-Cap Industrial Stocks With Strong Analyst Ratings