PEG Ratio

I am seriously considering adding PEG ratio to my list of criteria for selecting an investment. It embodies the sentiment of assessing how expensive a stock is in a forward looking way:

PEG Ratio: A stock's price/earnings ratio divided by its year-over-year earnings growth rate. In general, the lower the PEG, the better the value, because the investor would be paying less for each unit of earnings growth.

Typically anything under 2 is considered good...but as always...we are looking for exceptional value. As such, I am always on the prowl for good solid companies with a PEG below 1.0 or even 0.5 if it can be found. Here are how the three GenX holdings stack up at the moment...

1. BP: PEG=0.94
2. GSF: PEG=0.19
   
3. TNE: PEG=0.51

As you can see, all three of these are still dirt cheap as measured by future earnings growth despite their recent run. It should be noted that the ENTIRE offshore drilling sector (GSF) is extremely cheap at the moment...all with very low PEG ratios due to the fact that they are all commanding great day rates on their rigs.