Undervalued Growth
PEG ratio below 1 (low P/E relative to growth).
The PEG ratio divides the P/E by the earnings growth rate. Peter Lynch popularised it: a company growing earnings 20% a year on a P/E of 20 has a PEG of 1, and below 1 you pay less for each point of growth than the market usually charges.
PEG rests on a growth forecast, and forecasts for fast growers tend to run high. A one-off jump in earnings can also make the ratio look low.