While the market is still positive for the month, as the SPDR 500 ETF (SPY) is up 1%, the last couple of weeks has seen strong volatility and negative returns, with SPY down 4% since October 12th. This provides a buying opportunity for bargain-hunting investors, and I’ve found four strong growth companies that are trading at very attractive valuations.

I ran a select screen that looks at mid and large growth companies that are trading at reasonable prices. It considers factors such as earnings and revenue growth over the last five years and earnings potential for this year and next year. It also filters out any stocks that don’t meet specific valuation criteria such as price/earnings ratio (P/E) and price/earnings to growth ratio (PEG).

This screen resulted in over 30 stocks, but I delved deeper into the list to find the top four based on their growth potential in the current environment, their overall balance sheet, and future growth catalysts. My finished list includes Berry Global Group (BERY), Lennar Corporation (LEN), D.R. Horton (DHI), and Amkor Technology (AMKR).

Berry Global Group (BERY)

BERY manufactures and sells plastic packaging products in three segments, including a consumer packaging segment, health, hygiene, and specialties segment, and an engineered materials segment. Its diversified business structure has enabled it to mitigate any adverse impacts of weakness in one segment.  

The company should gain from its acquisition strategy. Its 2019 RPC Group buyout has been expanding growth opportunities in the plastic and recycled packaging industry. The company’s focus is also on improving operational productivity, and its cost-reduction actions should help bottom-line growth.

BERY has grown revenues at an average rate of 19.1% over the past five years. Its earnings have grown at an even higher rate of 44.4% over the same time period and are expected to grow at 16.6% over the next five years. In terms of valuation, the stock has a P/E of 10.7, and a PEG forward ratio of 0.7, which are both very attractive numbers.

The stock is rated a “Buy” in our POWR Ratings system, with a grade of “A” for Trade Grade and a “B” for Buy & Hold Grade and Industry rank. Those are three out of the four components that make up the POWR Ratings. The stock is also ranked #8 in the Industrial – Packaging industry.

Lennar Corporation (LEN)

LEN is the largest homebuilder by revenue in the United States. The company’s homebuilding operations target first-time homebuyers, and the stock has benefited from a booming housing market. The company had a strong third quarter as both earnings & revenues beat analysts’ expectations. Earnings jumped 33.3% year over year, which is the sixth consecutive quarter of earnings beating estimates.

The strong quarter can be attributed to a v-shaped recovery in the housing market due to lower interest rates. The company also benefited from effective cost control and a focus on making its homebuilding platform more efficient. This resulted in higher operating leverage. I believe the strong housing market will continue, and LEN should benefit from its focus on entry-level homes.

The pandemic has altered consumer buying behavior to favor building high volume, affordable entry-level homes due to a shift from city rentals to single-family homes. While the company had a strong quarter in growth, its sales have risen an average of 19.9% over the past five years. LEN has a P/E of 10.2 and a PEG forward ratio of 0.9.

The stock is rated a “Buy” in our POWR Ratings system. It holds a grade of “A” for Trade Grade and a “B” for Buy & Hold Grade, Peer Grade, and Industry Rank. It is also ranked #6 in the Homebuilders industry.

D.R. Horton (DHI)

While LEN is the largest homebuilder by revenue, DHI is the largest in operations as it operates in 90 markets across 29 states. The company builds single-family detached homes and offers products to entry-level buyers.

DHI has certainly benefited from the booming housing market and the Fed’s near-zero interest rate policy. The company is the most diversified housebuilder in the country, so investors shouldn’t be concerned with geographic housing risks. As I already mentioned, I believe that the strong housing market will continue, and DHI, like LEN, should benefit from its focus on affordable, entry-level homes.

DHI has grown revenues at an average annual rate of 11.8% over the past five years and earnings at a rate of 22.2%. Earnings are expected to grow 18.6% over the next five years. DHI has a very attractive P/E of 12.5 and a forward PEG ratio of 0.6.

The stock is rated a “Buy” in our POWR Ratings system, with a grade of “A” for Trade Grade, and a “B” for Buy & Hold Grade and Industry Rank. It is also the #5 ranked stock in the Homebuilder industry.

Amkor Technology (AMKR)

AMKR is a provider of outsourced semiconductor packaging and test services to integrated device manufacturers, fabless semiconductor companies, and contract foundries. The company has been benefiting from cost-cutting efforts and strength in its growing advanced system and package area.

The firm’s strong performance in its advanced product lines is contributing to its revenue. This is due to an increasing need for its advanced packaging technologies in the consumer and communications markets. Also contributing to growth is momentum across its ADAS infotainment applications and growing demand for advanced chips and modules in the computing market.

The company should see further growth opportunities in 5G, which will only strengthen its presence in the communications segment. AMKR just reported earnings of $0.38 yesterday, which beat the consensus analyst estimate of $0.26 and was up 65% year over year. Earnings are expected to grow at a rate of 29.8% over the next five years. Revenues came in at $1.4 billion, up 25% year over year.  

AMKR has a P/E of 10.0, a trailing PEG ratio of 0.4, and a forward PEG ratio of 0.5, making this stock extremely attractive at its current price. The company is rated a “B” in our POWR Ratings system, with a grade of “A” for Trade Grade and Industry Rank and a “B” for Peer Grade.

Want More Great Investing Ideas?

Top 11 Picks for Today’s Market

Dangerous Outlook for Stocks Into Election

5 WINNING Stocks Chart Patterns

BERY shares rose $0.03 (+0.06%) in after-hours trading Tuesday. Year-to-date, BERY has declined -0.67%, versus a 6.59% rise in the benchmark S&P 500 index during the same period.

About the Author: David Cohne

David Cohne has 20 years of experience as an investment analyst and writer. Prior to StockNews, David spent eleven years as a consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers. More...

More Resources for the Stocks in this Article