Image: Bigstock

What if you could be a value investor and still buy growth stocks?

Ben Graham, the father of value investing, wasn’t a fan of growth stocks unless he could get them cheap.

He used the PEG ratio to find cheap stocks with growth.

The PEG ratio is the price/earnings to growth ratio. Forget about calculating it yourself.

You can now find it on financial websites, including Zacks.com.

Screening for Cheap Growth Stocks Using the PEG Ratio

If you add the Zacks Ranks of #1 (Strong Buy) and #2 (Buy) to your screen, you should hopefully get stocks where analysts are raising their earnings estimates.

But what if you want to narrow it even more than this basic screen?

Adding a 5-year historical earnings growth rate over 20%, which is an aggressive growth rate, still gives you 18 total stocks.

5 Cheap Growth Stocks with Top Rank

1. Asbury Automotive (ABG - Free Report) is an auto retailer with a PEG ratio of just 0.47. Earnings are expected to grow 76% this year.

2. Group 1 Automotive (GPI - Free Report) is another auto retailer that is also cheap. It has a PEG ratio of 0.7 and a P/E of 6. Earnings are expected to rise 54% this year.

3. Lithia Motors (LAD - Free Report) operates as an auto retailer both in physical stores and online. Lithia and Driveway are expected to grow earnings by 63% in 2021. It has a PEG ratio of just 0.6.

4. America’s CarMart (CRMT - Free Report) is another auto retailer with value credentials. It has a PEG ratio of 0.57 and a forward P/E of 11.

5. Cabot Oil & Gas (COG - Free Report) is a natural gas producer with a PEG ratio of only 0.17. Revenue is expected to skyrocket 220% in 2021 and another 8.7% in 2022. It pays a dividend, currently yielding 2.7%.