PEG Below 0.1: CPCL, Akzo Nobel, Fedders Show Discounted Growth

Value investors spent decades hunting for a PEG below 1. FairStock's latest India screen shows a cluster of names with PEG below 0.1. CPCL and Akzo Nobel India are in that group. Fedders Holding shows the same. ACME Solar and Ventive Hospital also report ratios between 0.01 and 0.06. That is not a typo. A PEG under 0.1 says the market is willing to pay almost nothing for each unit of reported profit growth. The raw data: profit growth in this set runs from 21.1% to 999%. The PE multiples are low enough that the PEG collapses. [Chennai Petroleum Corporation](/stock/CHENNPETRO) (NSE: CHENNPETRO) is a classic cyclical refiner. Earnings move with crude prices and gross refining margins. When refining margins spike, profit growth can look exponential. When margins cool, growth reverses. A 0.02 PEG on CPCL does not mean the market is stupid. It means the market is pricing mean reversion. [Akzo Nobel India](/stock/AKZOINDIA) (NSE: AKZOINDIA) is different. It has a real brand and a mature distribution network. The paints franchise generates cash. If its profit growth is only 21.1%, a PEG near 0.05 suggests the stock trades at a discount to its own growth. That can happen when the parent company overhangs the float or when volume growth is slower than the profit line. It deserves a closer look than a refiner. What the PEG Screen Hides A 999% growth rate is not organic. It is base effect. Ventive Hospital and [Fedders Holding](/stock/511628) have small bases. ACME Solar may have capacity gains, but a triple-digit profit jump says more about last year's low base than this year's economics. [ACME Solar Holdings](/stock/ACMESOLAR) (NSE: ACMESOLAR) and [Ventive Hospital](/stock/VENTIVE) (NSE: VENTIVE) are growing. The screen does not separate recurring earnings from exceptional items. Then there is [Tata Steel](/stock/TATASTEEL) (NSE: TATASTEEL) and [Waaree Energies](/stock/WAAREEENER) (NSE: WAAREEENER). Both show up on the edges of this value screen. Tata Steel's earnings a...