Investors tend to look at a stock’s forward P/E ratio, which is the price divided by analysts’ consensus estimate for earnings per share over the following 12 months. Which companies trading at low P/E multiples are also expected to increase revenue quickly? -
When selecting investments, it is easy to get hung up on a particular metric, such as a dividend yield or a price ratio, but investors need to look deeper or they might miss opportunities.
Amazon.com Inc. AMZN provides an example: Its stock has typically traded at a high price-to-earnings ratio. Investors tend to look at a stock’s forward P/E ratio, which is the price divided by analysts’ consensus estimate for earnings per share over the following 12 months. Over the past 10 years, Amazon’s stock has traded at an average forward P/E of 79.5, while the S&P 500 SPX has traded at an average forward P/E of 18.7, according to FactSet. But Amazon’s stock was up 855% for 10 years through Friday, while the S&P 500 returned 235% with dividends reinvested.
It turns out that for Amazon’s management team, bottom-line earnings traditionally weren’t a focus. The emphasis was on reinvesting most of the cash being generated to expand the business in multiple directions. So the Amazon story was about revenue growth, rather than EPS growth.
And that brings us to Nvidia Corp. NVDA. Last week Laila Maidan looked into Nvidia’s relatively high forward P/E and explained why the stock might still be considered a bargain for long-term investors, based on analysts’ expectations for the company’s revenue growth. Nvidia’s stock traded at a forward P/E of 28.1 at Friday’s close, while the S&P 500 traded at a weighted forward P/E of 21.4.
It is not a surprise to see Nvidia trading at a P/E valuation that is 31% higher than that of the index. But based on consensus estimates among analysts polled by FactSet, Nvidia is expected to increase its sales per share at a compound annual growth rate of 41.7% through 2026, versus an expected sales-per-share CAGR of 5.5% for the S&P 500. All such estimates in this article are adjusted by FactSet to match calendar years; about 20% of companies in the S&P 500 have fiscal reporting periods that don’t match the calendar.
For Nvidia, investors pay a premium for the higher expected growth rate. And that sets the stage for a stock screen. Which companies trading at low P/E multiples are also expected to increase revenue quickly?
Screening the S&P 500 for high growth rates and lower P/E
For this screen we are looking at revenue growth projections — specifically sales per share. We are using the per-share numbers because they reflect expected dilution to a company’s share count if it issues new shares to help fund an acquisition. Merging with a competitor will obviously make revenue increase. But if the share count rises significantly, sales per share will be lower. The per-share numbers help investors to understand whether or not a company might have overpaid for an acquisition.
Starting with the S&P 500, we narrowed the list to companies trading at forward P/E ratios of 14 or less — half Nvidia’s valuation. Actually, we rounded down, so the list was confined to stocks trading at a forward P/E of less than 14.5.
Then we sorted the list by expected sales-per-share CAGR from calendar 2024 through 2026, based on consensus estimates among analysts polled by FactSet.
Here are the 20 stocks in the S&P 500 with the highest expected sales-per-share CAGR through 2025 among those trading at a P/E of less than 14.5:
Company
Ticker
Industry
Forward P/E
Expected sales-per-share CAGR from 2024 through 2026
Expand Energy Corp.
EXE
Integrated Oil
12.0
39.6%
Super Micro Computer Inc.
SMCI
Computer Processing Hardware
14.1
31.9%
EQT Corp.
EQT
Integrated Oil
13.6
26.0%
Micron Technology Inc.
MU
Semiconductors
9.4
23.2%
Coterra Energy Inc.
CTRA
Integrated Oil
8.3
21.2%
First Solar Inc.
FSLR
Solar Power Equipment
8.7
20.5%
Norwegian Cruise Line Holdings Ltd.
NCLH
Hotels/ Resorts/ Cruiselines
7.9
15.9%
Incyte Corp.
INCY
Pharmaceuticals
10.7
15.5%
Seagate Technology Holdings PLC
STX
Computer Peripherals
12.4
15.0%
Gen Digital Inc.
GEN
Software
11.1
13.0%
DaVita Inc.
DVA
Medical/ Nursing Services
11.6
12.0%
Oneok Inc.
OKE
Oil & Gas Pipelines
14.2
11.8%
Molina Healthcare Inc.
MOH
Managed Healthcare
11.7
11.8%
Aptiv PLC
APTV
Electrical Products
9.0
10.9%
UnitedHealth Group Inc.
UNH
Managed Healthcare
12.5
10.7%
Elevance Health Inc.
ELV
Managed Healthcare
10.5
10.4%
Dell Technologies Inc. Class C
DELL
Computer Processing Hardware
11.4
10.2%
American International Group Inc.
AIG
Multi-Line Insurance
12.2
10.2%
HCA Healthcare Inc.
HCA
Hospital/ Nursing Management
14.4
9.9%
Ball Corp.
BALL
Containers/ Packaging
14.3
9.7%
Source: FactSet
You may need to scroll the table to see all of the data.
It is a varied list. Super Micro Computer SMCI ranks second, with a 31.9% CAGR expected for sales per share through 2026. The stock soared last month after President Donald Trump announced investment agreements with Saudi Arabia to build data centers in the U.S., which lifted suppliers of related equipment.
But with the stock having tumbled 40% this year through Friday, with dividends reinvested, analysts working for brokerage and research firms believe the worst is over, with 21 out of 29 analysts polled by FactSet rating UnitedHealth a buy or the equivalent. Only three of the analysts rate the stock a sell or the equivalent.
Leaving the companies passing the screen in the same order, here is a summary of analysts’ opinions about the stocks:
Company
Ticker
Share buy ratings
Share neutral ratings
Share sell ratings
May 30 price
Consensus price target
Implied 12-month upside potential
Expand Energy Corp.
EXE
90%
10%
0%
$116.13
$128.45
11%
Super Micro Computer Inc.
SMCI
47%
41%
12%
$40.02
$40.69
2%
EQT Corp.
EQT
72%
24%
4%
$55.13
$60.63
10%
Micron Technology Inc.
MU
85%
12%
3%
$94.46
$123.95
31%
Coterra Energy Inc.
CTRA
83%
17%
0%
$24.31
$33.41
37%
First Solar Inc.
FSLR
78%
20%
2%
$158.08
$202.43
28%
Norwegian Cruise Line Holdings Ltd.
NCLH
72%
28%
0%
$17.65
$23.65
34%
Incyte Corp.
INCY
45%
52%
3%
$65.06
$73.95
14%
Seagate Technology Holdings PLC
STX
59%
36%
5%
$117.94
$119.88
2%
Gen Digital Inc.
GEN
45%
55%
0%
$28.48
$31.83
12%
DaVita Inc.
DVA
9%
83%
8%
$136.26
$167.14
23%
ONEOK Inc.
OKE
67%
33%
0%
$80.84
$106.75
32%
Molina Healthcare Inc.
MOH
42%
47%
11%
$305.04
$356.93
17%
Aptiv PLC
APTV
68%
23%
9%
$66.81
$75.76
13%
UnitedHealth Group Inc.
UNH
73%
17%
10%
$301.91
$376.05
25%
Elevance Health Inc.
ELV
75%
25%
0%
$383.84
$491.94
28%
Dell Technologies Inc. Class C
DELL
81%
19%
0%
$111.27
$136.52
23%
American International Group Inc.
AIG
55%
45%
0%
$84.64
$90.88
7%
HCA Healthcare Inc.
HCA
59%
34%
7%
$381.39
$387.95
2%
Ball Corp.
BALL
61%
33%
6%
$53.58
$61.23
14%
Source: FactSet
Any stock screen has its limits and should only be used as a tool as part of your own research if you are selecting individual companies for investment. Click on the tickers for more about each company.
