Five Extremely Undervalued Stocks

Depending on the analyst there a variety of way for stocks to be valued. I will use several, but my favorite is the Price-to-earnings ratio divided by growth. Also known as the PEG Ratio. The reason I prefer to use the PEG is that it takes into consideration not only the current valuation based on earnings, but also future growth. 

The PEG Ratio is the P/E ratio divided by future annual growth estimates. For example, if a stock is trading with a P/E ratio 12 with future earnings growth projected at 6% the PEG would be 12/6 or 2.0. A stock with a P/E ratio of 20, but earnings growth of 40% would have a PEG ratio of 20/40 or 0.50.

I consider stocks under 1.0 undervalued; here are 5 stocks that have PEG Ratios well below 1.0.

• Apple ($AAPL) - PEG Ratio 0.52
• Ensco ($ESV) - PEG Ratio 0.40
• Delta Air Lines ($DAL) - PEG Ratio of 0.21
• Cosan Limited ($CZZ) - PEG Ratio 0.43
• Delphi Automotive ($DLPH) - PEG Ratio 0.57