In 2012, Yandex NV (NASDAQ:YNDX) reported EPS of $0.82 and is expected to earn $1.12 in 2013. In 2014, analysts expect EPS of $1.43. After that, analysts expect EPS growth to average 29.5% a year in the next five years. Using 2014 estimated earnings, the stock trades at a P/E ratio of 24.
The PEG ratio compares the P/E ratio to the expected EPS growth rate, and Yandex NV (NASDAQ:YNDX) has a PEG ratio of 0.81. The PEG ratio should be 1 for a stock that is fairly valued. This measure shows that Yandex NV (NASDAQ:YNDX) is undervalued.
Over the past five years, sales growth has averaged 17% a year, EPS grew an average of 14.7% a year, and free cash flow growth averaged 30.1% a year. Analysts expect earnings growth of 26.3% a year on average for the next five years. Based on 2014 EPS estimates, Copa Holdings, S.A. (NYSE:CPA) could be worth more than $300 a share, more than double its recent price.
Copa Holdings, S.A. (NYSE:CPA) has been profitable every year since 2006, including the global recession years of 2008 and 2009, when large U.S. airlines like United Continental Holdings Inc (NYSE:UAL) and Delta Air Lines, Inc. (NYSE:DAL) reported large losses.
Grantham has found winning stocks in the past, and equally important, he has avoided many of the large losses of the past. Most investors would not hunt for value in Russia and Columbia, but Grantham knows that successful investing requires hard work. He now holds Yandex NV (NASDAQ:YNDX) and Copa Holdings, S.A. (NYSE:CPA), stocks which my system also highlights as potential winners.
My latest research shows that following market “gurus” like Grantham is one of the best ways to make money in the stock market. And Grantham is just one of the 20 investing gurus I follow.
But it’s not as simple as looking at their portfolio and buying what they hold… Timing matters. I’ve come out with a new, free report, that helps you understand exactly how you can beat the best gurus in the country at their own game. To get access to the free report, “How To Outperform Soros, Icahn… Or Even Buffett,” click here.
– Michael J. Carr
The article My Top 2 Picks From A Legendary Value Investor originally appeared on StreetAuthority and is written by Michael J. Carr.
Michael J. Carr does not personally hold positions in any securities mentioned in this article. StreetAuthority LLC does not hold positions in any securities mentioned in this article.
