There are various metrics to gauge a stock's valuation to decide if it is under or overvalued. One such method is the price-to-earnings (P/E), which measures its current share price relative to its per share earnings.
In today's data watch series, Moneycontrol analyses stocks that have doubled investor wealth but are still trading below their five-year average P/E multiple.
We filtered stocks based on the following parameters:
- Only those companies that posted a profit in each of the last five fiscals (FY15-FY19) were selected
- The share price of these companies should have doubled in the last one year
- We eliminated companies whose current market cap was less than Rs 100 crore
- The last filter we employed was to include those stocks whose trailing 12-month P/E was below its five-year average
Only eight companies make the final cut. These stocks encompass sectors like healthcare, trading, capital goods, education, media & entertainment, chemicals, and construction materials.
Disclaimer: Through this series, Moneycontrol seeks to highlight interesting financial data of companies. This article should not be treated as a recommendation to buy or sell stocks. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.