Top 3 Rallying and Profitable Stocks Undervalued by the PEG Ratio

Includes: DHCP, UNH, VIV
by: Kapitall

If you are a value investor that likes to go with the trend, this may be an interesting list for you to begin your own research.

To construct this list we looked for stocks on an upward trend, i.e. current price above 20-, 50-, 200-day moving averages. We then gathered all of those names that were trading at a PEG ratio below 1 and compared them against the industry with respect to the following profitability ratios:

- Trailing Twelve Month (TTM) Gross margin
- TTM Operating margin
- And TTM pretax margin

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

Given this data, which of these companies are you most bullish about?

1. Unitedhealth Group, Inc. (NYSE:UNH): Health Care Plans Industry. Market cap of $52.22B. This stock is trading 0.76% above its 20-day MA, 3.91% above its 50-day MA, 22.94% above its 200-day MA. PEG at 0.99. Gross margin 24.66% vs. industry average 20.84%. Operating margin 8.58% vs. industry average 8.48%. Pretax margin 7.88% vs. industry average 6.73%. The stock has gained 59.97% over the last year.

2. Vivo Participacoes S.A. (NYSE:VIV): Wireless Communications Industry. Market cap of $11.82B. This stock is trading 1.83% above its 20-day MA, 5.59% above its 50-day MA, 22.54% above its 200-day MA. PEG at 0.69. Gross margin 55.2% vs. industry average 49.93%. Operating margin 19.99% vs. industry average 15.75%. Pretax margin 21.58% vs. industry average 13.93%. The stock has had a good month, gaining 10.82%.

3. Walter Investment Management Corp. (WAC): Asset Management Industry. Market cap of $464.63M. This stock is trading 3.97% above its 20-day MA, 2.79% above its 50-day MA, 0.86% above its 200-day MA. PEG at 0.69. Gross margin 61.02% vs. industry average 38.68%. Operating margin 61.02% vs. industry average 37.73%. Pretax margin 18.45% vs. industry average 16.8%. The stock has had a couple of great days, gaining 6.06% over the last week.

*Data sourced from Fidelity and Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.