CHICAGO, Nov. 3, 2011 /PRNewswire/ -- Stocks in this week's article include: Avis Budget Group, Inc. (NASDAQ: CAR), Hawaiian Holdings, Inc. (NASDAQ: HA), Helix Energy Solutions Group, Inc. (NYSE: HLX), IAC/InterActiveCorp. (NASDAQ: IACI) and The Ultimate Software Group, Inc. (NASDAQ: ULTI). Kevin Matras shows how to calculate a stock's price target and how to find stocks currently trading below them.
Screen of the Week written by Kevin Matras of Zacks Investment Research:
Regardless of what you think may or may not happen to the market, everyone would like to have a better understanding of what a stock's potential price target is. And that's what we're going to talk about today.
You can do this by using either technicals or fundamentals. Today, I'm going to focus in on the fundamentals. And we're going to use the P/E ratio to calculate it.
Many people use P/E ratios to determine a company's perceived under or overvaluation. But you can also use the P/E ratio to determine a stock's upside and downside price targets as well.
So, the calculation to figure out your stock's price target is below:
Price x ((current P/E) / (forward P/E)) = future price (or price target)
The screen I'm running today finds stocks with their P/Es under their average P/E over the last 5 years and that also have price targets of at least 20% or more above their current price.
The Parameters are...
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