The price/earnings to growth ratio (PEG ratio) is a stock’s price-to-earnings (P/E) ratio divided by the growth rate of its earnings for a specified period. Moreover, a company with a ‘fundamentally strong’ nature portrays a certain set of characteristics, viz, strong & consistent financials, low leverage ratios, etc.
The abovementioned metric is used to determine a stock’s value along with the factorization of the company’s expected earnings growth. The same is thought to provide a more complete picture than the more standard P/E ratio.
A combination of a lower PEG ratio with a ‘fundamentally strong’ nature makes a stock attractive for Retail Investors in the market. Listed below are three such fundamentally strong stocks with PEG ratio of less than 0.50 that one should add to their watchlist:
Elecon Engineering Company Limited
With a market capitalization of Rs 11,287.32 crores, the stocks of Elecon Engineering Company Limited, engaged in the design and manufacturing of material handling equipment and incraft carriers, are currently trading at Rs 1,006, gaining approximately 0.90 percent as compared to the previous closing levels of Rs 997.35 apiece.
The company’s stock exhibits a PEG ratio of 0.36.
During the recent financial quarters, the company’s prime business indicators, i.e., operating revenues as well as after-tax profits, showed opposing movements with the former, on one end, decreasing from Rs 485 crores during Q2FY24 to Rs 474 crores during Q3FY24 and the latter, keeping the timeframe the same, rose marginally from Rs 89 crores to Rs 90 crores.
Nava Limited
With a market capitalization of Rs 8,114.49 crores, the stocks of Nava Limited, having businesses in metals manufacturing, power, mining, etc, are currently trading at Rs 518.85, gaining approximately 1.70 percent as compared to the previous closing levels of Rs 510.25 apiece.
The company’s stock exhibits a PEG ratio of 0.27.
During the recent financial quarters, the company’s prime business indicators, i.e., operating revenues as well as after-tax profits, showed positive movements with the former increasing from Rs 922 crores during Q2FY24 to Rs 930 crores during Q3FY24 and the latter, keeping the timeframe the same, rising from Rs 193 crores to Rs 465 crores.
JK Paper Limited
With a market capitalization of Rs 6,418.65 crores, the stocks of JK Paper Limited, a leading player in Office papers, Coated papers and Packaging boards, etc, are currently trading at Rs 378.90, gaining approximately 0.30 percent as compared to the previous closing levels of Rs 378 apiece.
The company’s stock exhibits a PEG ratio of 0.16.
During the recent financial quarters, the company’s prime business indicators, i.e., operating revenues as well as after-tax profits, showed opposing movements with the former, on one end, increasing from Rs 1,650 crores during Q2FY24 to Rs 1,706 crores during Q3FY24 and the latter, keeping the timeframe the same, slipping from Rs 306 crores to Rs 236 crores.
Written by Amit Madnani
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