At a time when volatility strikes every second day, investors often rely on value investing rather than other options like growth or momentum. As soon as other investors start selling their stocks at a cheaper rate in times of market uncertainty, value investors take this as an opportunity to pick good stocks at a discounted price.
Several stocks that have surged significantly in the recent past have shown the overwhelming success of this pure-play investment strategy. Here, we discuss four such stocks — Envista Corporation NVST, Sanmina Corporation SANM, TAL Education Group TAL and Avient Corporation AVNT.
However, this apparently simple value investment technique has some drawbacks and not understanding the strategy properly may often lead to “value traps.” In such a situation, these value picks start to underperform over the long run as the temporary problems, which once drove the share price down, turn out to be persistent.
There are many value investment yardsticks, such as dividend yield, P/E or P/B, which are simple and can single out whether a stock is trading at a discount.
However, for investors looking to escape such value traps, it is also vital to determine where the stock would be headed in the next 12 to 24 months. Warren Buffett advises these investors to focus on the earnings growth potential of a stock. This is where lies the importance of a not-so-popular value investing metric, the PEG ratio.
PEG Ratio at a Glance
The PEG ratio is defined as (Price/ Earnings)/Earnings Growth Rate
A low PEG ratio is always better for value investors.
While P/E alone fails to identify a true value stock, PEG helps find the intrinsic value of a stock.
There are some drawbacks to using the PEG ratio. It doesn’t consider the very common situation of changing growth rates, such as the forecast of the first three years at a very high growth rate, followed by a sustainable but lower growth rate over the long term.
Hence, PEG-based investing can turn out to be even more rewarding if some other relevant parameters are also taken into consideration.
Here are some of the screening criteria for a winning strategy:
PEG Ratio less than X Industry Median
P/E Ratio (using F1) less than X Industry Median (for more accurate valuation purposes)
Zacks Rank #1 (Strong Buy) or 2 (Buy) (Whether good market conditions or bad, stocks with a Zacks Rank #1 or 2 have a proven history of success.)
Market Capitalization greater than $1 billion (This helps us to focus on companies that have strong liquidity.)
Average 20-Day Volume greater than 50,000 (A substantial trading volume ensures that the stock is easily tradable.)
Percentage Change F1 Earnings Estimate Revisions (4 Weeks) greater than 5% (Upward estimate revisions add to the optimism, suggesting further bullishness.)
Value Score of less than or equal to B: Our research shows that stocks with a Style Score of A or B when combined with a Zacks Rank #1, 2 or 3 (Hold) offer the best upside potential.
Our PEG-Driven Picks
Here are four stocks that qualified the screening:
Envista: Headquartered in Brea, CA, Envista provides dental solutions through more than 30 brands, including Nobel Biocare, Ormco, DEXIS and Kerr. Its Specialty Products & Technologies segment, which generated 64.4% of 2025 revenues, offers dental implants, orthodontic products, aligners, prosthetics, treatment software and related technologies.
NVST currently has a Zacks Rank #1 and a Value Score of B. Envista also has an impressive five-year expected growth rate of 13.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Sanmina: Headquartered in San Jose, CA, Sanmina provides electronics manufacturing, engineering and supply-chain solutions to OEMs across industrial, medical, defense, aerospace, automotive, communications and AI infrastructure markets. Its IMS segment, which generated 87.5% of 2025 revenues, covers PCB assembly, systems integration and fulfillment, while CPS provides advanced components and related services.
Sanmina currently has a Zacks Rank #1 and a Value Score of B. SANM also has an impressive five-year expected growth rate of 27.4%.
TAL Education: It provides smart learning solutions in China through small classes, personalized services, online courses and learning content across print, digital and device-based formats. Founded in 2003 and headquartered in Beijing, the company also offers educational software, learning devices, mobile applications, and related technology and consulting services.
Apart from a discounted PEG and P/E, TAL currently has a Zacks Rank #1 and a Value Score of A. TAL has a long-term expected growth rate of 13.6%.
Avient: It is a global specialty-materials company providing color, additives, inks, engineered polymers, advanced composites and performance fibers. It serves diverse markets through two segments, Color, Additives and Inks and Specialty Engineered Materials, with 61% of 2025 sales generated outside the United States.
Avient has a Zacks Rank #2 and a Value Score of B. AVNT also has an impressive five-year expected growth rate of 10.4%.
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