Value on the Move: Screening for Low PEG Ratio Stocks

by Cara Scatizzi

Value On The Move: Screening For Low PEG Ratio Stocks Splash image

It is not uncommon for a value investor to worry about being caught in a “value trap.” This occurs when a stock appears to be attractive based on valuation multiples, but the price remains depressed. The trap is that the stock’s seemingly low price is actually appropriate. The value trap can also occur when a stock is undervalued, but other investors fail to catch on to this mispricing.

A good way to avoid this problem is to look for stocks that have characteristics besides a low valuation that justify a higher price. Two screens highlighted in this arti

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Cara Scatizzi is a former associate financial analyst at AAII.


Discussion

Girishbhai from Florida posted over 3 years ago:

Current information about the company is important in making a decision. AMED is under investigation for possible fraud in medical billings. Recent information is not translated in the data. Because it takes few years to show up. One should investigate extreme outliers in detail if one wants to invest in them.


Matt from Oklahoma posted over 3 years ago:

Good example of why you need to go beyond the numbers. AMED is pointed out as attractive based on the screen, but they are in the middle of a potential class action lawsuit claiming that earnings were misrepresented based on medicare fraud.


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