How To Find Undervalued Stocks Like a Pro Value Investor

PEG ratio looks at the P/E ratio compared to the percentage growth in annual EPS. If a company has solid earnings and a low PEG ratio, it could mean that its stock is undervalued. To calculate the PEG ratio, divide the P/E ratio by the percentage growth in annual EPS. Undervalued stocks can become more attractive to some investors in times of stock market volatility, says Milan. Below is a table of the 9 most undervalued stocks in the S&P 500 index, ordered from lowest to highest trailing PE ratio.

• Tesla made its initial public offering in June 2010 at $17 per share.
• In rare cases, the net value of the company’s assets may be greater than the market value of the stock.
• Comparing an IT company’s PE to a manufacturing company’s PE ratio to judge the stocks are undervalued would be misleading.
• Dividend yield percent is another easy way to narrow down your search for undervalued companies.
• While the PE Ratio is helpful in determining whether a stock is expensive or not, it doesn’t tell the whole story.

It’s a sector worth following, even if you don’t plan to invest in it immediately. Though it’s not as comprehensive as premium stock screeners, it is one of the most popular, and you can use it at any time without needing to provide personal information. It’ll work best if you only occasionally hunt for undervalued stocks. As per DSP Mutual Fund’s Kalpen Parekh, one of the key criteria used by DSP Mutual Fund to identify a good company is by using the return on equity (ROE) metric. A high return on equity over the long term indicates that the company utilizes its capital efficiently and creates more value for shareholders. So the higher the ROE of a company, the better its performance compared to its peers.

Using Technical Analysis

PE Ratio is one of the metrics to identify undervalued stocks in India in 2021. The PE ratio compares the current market value of a stock with its earnings per share. Remember that the standard PE ratio differs from industry to industry. Comparing an IT company’s PE to a manufacturing company’s PE ratio to judge the stocks are undervalued would be misleading. The stock market values companies based on their fundamentals, past financial performance, future earnings growth potential, and other metrics.

We may receive compensation from the providers of some products mentioned in this article. This content has not been provided by, reviewed, approved or endorsed by any advertiser, unless otherwise noted below. Recent stocks from this report have soared up to +178.7% in 3 months – this month's picks could be even better.

Price-to-Earnings Ratio

A stock screener is a tool that helps you filter through an extensive list of stocks based on company financial data and other inputs. Thanks to the power of the web, there are many high-quality, easy-to-use stock screeners available. Some are free, though you’ll have to pay for the most advanced features.

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Keep an Eye on These 3 Upstream Stocks

If you’re not quite sure about a stock, consider talking to a financial advisor. In addition to looking at the PE ratio, a company’s market capitalization — or market cap — can also give you insight into the true value of a stock. Market cap is the total value of a company’s shares of stock, and it can tell you how profitable a company is. You can calculate the market cap by multiplying the current price of a single share by the total number of shares held by stockholders.

Some of the go-to ratios include price-to-sales (P/S), price-to-earnings (P/E), price-to-book value (P/B), and price-to-cash-flow. The P/S and P/E ratios look at the top and bottom lines of the income statement, the P/B ratio uses the balance sheet, and price-to-cash-flow ratio examines the cash flow statement. For example, earnings tend to be a lot more volatile than sales, so P/Es tend to move around a lot more than P/S ratios. Windsor II Fund Inv (VWNFX) is a value fund with a focus on large-capitalization stocks. It has a lower expense ratio at 0.34%, but it does require a minimum investment of $3,000.