3 Stocks With Magic PEG Ratios

For generations, value investors have looked to the price-to-earnings ratio, or P/E, as a means to find value stocks.

However, Benjamin Graham, long considered to be the "father" of value investing, found that a low price-to-earnings ratio wasn't enough to unearth the true undervalued companies.

Graham combined the low price-to-earnings ratios with the power of growth by using the PEG ratio. The PEG ratio is calculated by taking the price-to-earnings (P/E) ratio and dividing it by the growth rate.

Normally, a stock with a PEG ratio under 1.0 is considered a "value".

With the S&P 500 and the NASDAQ trading at new all-time highs, you might think it would be hard to find ANY value but it does still exist if you dig deep.

3 Stocks with Magic PEG Ratios

1. The Chemours Company (CC - Snapshot Report)

Chemours makes performance chemicals. The company has 37 production facilities in 12 countries in three segments: Titanium Technologies, Fluoroproducts, and Chemical Solutions.

It recently celebrated its first year as a public company as it was spun off from DuPont in 2015.

Chemours is in the middle of a 5-Point Transformation Plan. It sold its Sulfur business for $325 million and announced the sale of its Clean and Disinfect business for $230 million.

Everyone in the industry is raising prices of their TiO2 so that is creating a boost for earnings. Analysts have been raising 2016 and 2017 estimates.

Earnings for 2017 are expected to jump 73.5%.

Magic PEG ratio = 0.9
P/S ratio = 0.4
Zacks Rank #2 (Buy)

2. Party City Holdco Inc. (PRTY - Snapshot Report)

Party City is the largest party goods company be revenue in North America and the largest vertically integrated supplier of decorated party goods globally by revenue.

It designs, manufactures and sources party goods, including paper and plastic tableware, balloons, Halloween costumes, accessories, novelties and party gifts.

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Disclosure: Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the  more

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