In light-weight of Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) CEO Warren Buffett (Trades, Portfolio) celebrating his ninetieth birthday on Sunday, four stocks that have a rate-earnings-to-growth ratio much less than one are AmerisourceBergen Corp. (NYSE:ABC), Team one Automotive Inc. (NYSE:GPI), Asbury Automotive Team Inc. (NYSE:ABG) and Slumber Selection Corp. (NASDAQ:SNBR) in accordance to the Buffett-Munger Screener, 1 of numerous value screens offered to GuruFocus Top quality associates.
Buffett’s most loved current market indicator tops 180% ahead of his ninetieth birthday
Buffett’s most loved current market indicator, which captures the ratio of the Wilshire 5000 whole-cap current market index to the U.S. gross domestic merchandise, stood near 184% on Friday, shut to an all-time higher. Though the Wilshire 5000 climbed to in excess of $35.6 trillion, gross domestic merchandise of approximately $19.forty one trillion reflects an yearly price decrease of 31.7% for the 2nd quarter in accordance to a 2nd estimate unveiled by the Bureau of Economic Examination. The new estimate is a little bit greater than the yearly price decrease of 32.nine% in accordance to sophisticated estimates issued in July.
The Dow Jones Industrial Normal closed at 28,653.87, up 161.sixty points from Thursday’s shut of 28,492.27. Apple Inc. (NASDAQ:AAPL), the leading keeping of Berkshire, closed at $499.23 on its closing investing day prior to its four-for-1 stock break up, down a little bit from the prior shut of $five hundred.04.
Buffett-Munger Display screen seeks fantastic companies at reasonable price ranges
Buffett and co-supervisor Charlie Munger (Trades, Portfolio) reported that they seek out four important standards when searching for investments: easy to understand corporations, favorable very long-phrase prospective customers, honest and capable administration and interesting share price ranges. To qualify for the Buffett-Munger Screener, a enterprise should have higher organization predictability, potent aggressive positive aspects, no significant debt when rising corporations and very low valuations. For the valuation criterion, GuruFocus considers the rate-earnings-to-growth ratio, which captures the ratio of rate-earnings to the 5-calendar year earnings growth price.
Legendary trader Peter Lynch, who managed the Fidelity Magellan Fund throughout the nineteen eighties, believes that the reasonable rate-earnings ratio for growth companies equals its growth price, i.e., the rate-earnings-to-growth ratio is one. A PEG ratio much less than one signifies that the rate-earnings ratio is much less than the growth price, suggesting undervaluation. GuruFocus involves a PEG ratio much less than two for the Buffett-Munger Screener.
Shares of AmerisourceBergen closed at $ninety seven.fifty five, yielding a PEG ratio of approximately .65. The stock’s PEG valuation outperforms 90.32% of world-wide competitors.
AmerisourceBergen engages in wholesale sourcing and distribution of specialty, brand name-name and generic pharmaceutical items to hospitals, clinical clinics and retail pharmacies. GuruFocus ranks the Chesterbrook, Pennsylvania-based mostly company’s profitability eight out of ten on numerous beneficial investing symptoms, which include expanding functioning margins, a four-star organization predictability rank, a higher Piotroski F-rating of eight and a return on fairness that outperforms 96.92% of world-wide clinical distribution competitors.
Gurus with substantial holdings in AmerisourceBergen include Pioneer Investments (Trades, Portfolio), Larry Robbins (Trades, Portfolio)’ Glenview Cash Management and Seth Klarman (Trades, Portfolio)’s Baupost Team.
Team one Automotive
Shares of Team one closed at $ninety one.eighty two, yielding a PEG ratio of approximately .78. Team 1’s PEG valuation outperforms seventy seven.ninety seven% of world-wide competitors.
The Houston-based mostly enterprise owns and operates in excess of 185 automotive dealerships, 242 franchises and forty nine collision support centers in the U.S., the U.K. and Brazil. GuruFocus ranks the company’s profitability and valuation eight out of ten on numerous beneficial investing symptoms, which include a 5-star organization predictability rank, a rate-earnings ratio that outperforms 75.81% of world-wide competitors and a rate-profits ratio that outperforms 89.forty four% of world-wide companies specializing in vehicles and components.
Shares of Asbury Automotive closed at $108, yielding a PEG ratio of approximately .ninety one. The company’s PEG valuation outperforms in excess of 75% of world-wide competitors.
GuruFocus ranks the Duluth, Ga-based mostly car dealership company’s profitability eight out of ten on numerous beneficial investing symptoms, which include expanding functioning margins, a 5-star organization predictability rank and a return on fairness that outperforms ninety five.84% of world-wide competitors.
Shares of Slumber Selection closed at $forty nine.18, yielding a PEG ratio of approximately .94. Slumber Number’s PEG valuation outperforms 69.63% of world-wide competitors.
GuruFocus ranks the Minneapolis-based mostly sleep remedies company’s profitability nine out of ten on numerous beneficial investing symptoms, which include a 4.five-star organization predictability rank, a return on belongings that outperforms 81.47% of world-wide competitors and 3-calendar year income and earnings growth prices that outperform in excess of eighty five% of world-wide furnishings, fixtures and appliances companies.
Disclosure: Extensive Apple.
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I am an editorial researcher at GuruFocus. I have a Master’s in Finance from SMU, and I take pleasure in crafting studies on economical trends and trader portfolios. Comply with me on Twitter at @JamesLiGuru!
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