Some say Apple, some say Cupertino, while others say AAPL and a select few say Apple Inc. (NASDAQ:AAPL), but it's all the same. What most tech investors want to know is: is Apple a buy?
Well, at least from a value standpoint, it's very cheap.
When I say cheap, I don't refer to penny stocks or the lowest priced stocks trading on S&P 500. It cannot be, because this list we'll take you through contains big names like Apple Inc. (NASDAQ:AAPL) and Yahoo! Inc. (NASDAQ:YHOO), which cannot be termed as cheap on any parameter but one. We have used Price-to-Earnings Growth (PEG) ratios to ascertain the value of every stock in the entire equity universe, and on this basis, we've prepared a list of the 20 cheapest stocks in the S&P 500 at the moment.
Just to remind you, Apple Inc. (NASDAQ:AAPL) was in the news last year when it made it to the top by touching the highest market cap mark that any company has ever made, but that has no effect on Apple's bargain basement valuation, in layman's terms.
The PEG ratio is calculated by dividing the price-to-earnings (P/E) multiple of a company, such as Apple, by its expected earnings growth rate. In effect, this allows investors to compare stocks regardless of what Wall Street expects EPS to do in the coming years, though it's important to note that these calculations are dependent on analysts' forecasts.
Thus, the PEG ratio indicates whether a stock is underpriced or overpriced. Ideally, a PEG of less than 1 is considered to be good because it depicts that the growth rate of a particular company is more than its P/E ratio. However, while calculating the PEG, one should be very careful and use their best judgement; for instance, while calculating PEGs, we use expected growth rates, and as we all know, historic performance doesn’t guarantee future results.
In general, this ratio presents the "big" valuation picture for any stock, and in Apple Inc. (NASDAQ:AAPL)'s case, it's an attractive one. We should also note that this metric does not directly measure a stock's income-related potential, so dividend-heavy investors may want to check out some of our other analyses.
Without further ado, let's take a look at Apple, Yahoo and the rest of the S&P 500's cheapest members. All data, including Apple Inc. (NASDAQ:AAPL) information, is gathered from FinViz.