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0:00 After years of strong gains, especially in technology and AI, most investors are pretty much asking the same question. Am I buying a great company or am I simply overpaying for a great story? But here's where things get interesting. Even in what many investors consider an expensive market, there are still high-growth companies whose expected earnings growth may actually justify or potentially exceed what you're paying for them. One of my favorite ways to find these types of companies comes from legendary investor Peter Lynch. This is called the PEG ratio. It takes a company's PE ratio and compares it to its expected earnings growth, essentially asking how much am I paying for each unit of growth. Today in this video, I'm going to show you 10
0:45 high-growth companies currently screening at a low PEG ratio, meaning they're actually undervalued even at very close to all-time highs, including some of the biggest names in AI and technology. Obviously, I'm not saying that these are automatically cheap or even that you should go out and buy them. I'm showing you why in an expensive market, looking beyond the headline PE ratio could help you find [clears throat] companies where their growth is actually justified in these high prices even today. Let's get into it. My name is Nolan Gouveia. My students call me Professor G, and I made this channel to make investing simplified. Remember that all investing carries risk, so do your own research. This is not financial advice, and I'm not a financial advisor. Peter Lynch famously generated roughly 29% annualized returns over 13 years while
1:32 managing Fidelity's Magellan Fund. Now, one important part of his valuation framework was the PEG ratio, and the concept is straightforward. PEG ratio equals the PE ratio divided by the expected earnings growth rate. Now, here's why I like the PEG ratio, and especially for today in these high-flying, quick-growing companies way faster than they used to grow back in like the 1960s or 1980s, we need something updated that actually factors in how fast these companies can actually grow. And so the old school purely PE ratio is still something to kind of consider, but it definitely isn't the only metric. This one is more important. Let's say company A trades at 20 times earnings and it's expected to grow earnings by just 10%. It's PEG would be
2:17 20 / 10, which equals 2.0. Now compare that with a company like Nvidia, which has recently been trading around 19 to 20 times forward earnings, while analysts are expecting extremely strong earnings growth. Nvidia just reported quarterly revenue growth of 106% and management is projecting roughly 70% revenue growth for the following fiscal year. If you assume for illustration 40% expected EPS growth, the PEG would be 20 / 40, which equals 0.50. So both companies might look similar if you only look at the PE ratio. Company A, 20 times earnings. Nvidia, about 20 times earnings. So both have the same PE, but the PEG tells a completely different story. Company A was 2.0 PEG, Nvidia was
3:05 about a 0.5 PEG. That's the power of the PEG ratio. You're not just asking how expensive is this company, you're asking how expensive is this company relative to how fast its earnings are expected to grow. And generally a PEG under one is where I start to get very interested, because you're potentially paying less than $1 of valuation for every $1 of expected growth. Now just remember a low PEG doesn't necessarily mean, "Okay, it's 100% a shoe-in to just buy that company." You still now have to determine whether that growth is realistic, sustainable, and possibly already priced into the stock. This is why stock picking is so hard, but the PEG ratio is a great place to start. So I compiled a list of 10 companies with
3:50 PEG ratios under one, and I'm going to give you a reason why these are solid companies to look at and start your research for you. I always hope that you're doing your own research, you're not just taking what I or anyone else has to say. Do your own research for your specific portfolio. Now, number one is SoFi with a PEG of about 0.9. SoFi just reported record Q2 adjusted net revenue of roughly $1.2 billion, record member and product growth, and a $157 million of net income. Management continues to expect roughly 30% annual adjusted net revenue growth in 2026. The bull case is that the market is still valuing SoFi more like a lender than a broader digital financial services platform. You all know I've been invested in SoFi for a while, and I
4:37 really like that company. Now, just so you know, for this list, it's going to be short and sweet just like that. I'm going to give you the PEG, I'm going to give you a couple of reasons why, but again, I want you to do the deeper dive to see if it makes sense for your portfolio. So, number two is AMD, and that one has a PEG of about 0.9. AMD has secured a major 6 gigawatt GPU deployment agreement with OpenAI, including a warrant for up to 160 million AMD shares tied to purchase and performance milestones. AMD's also expanding its AI infrastructure. The opportunity is enormous, but execution and competition against Nvidia remain major factors. Now, the next company on this list is exciting, and it's actually a health company. And speaking of health, now September is here, and life is about to get busy again. And one
5:24 thing that I've learned through investing is that consistently beats trying to be perfect. That's actually why I've been incorporating AG1 into my daily routine. Thank you to AG1 for sponsoring this video. AG1 next gen is much more than just a greens powder. It combines 75 plus ingredients, including vitamins and minerals, probiotics, prebiotics superfoods and antioxidants, all into one daily drink. The new next-gen formula has been upgraded with additional vitamins and minerals and five clinically studied probiotic strains designed to support gut health. I've tried a lot of these antioxidant greens powders and most of them don't taste very good, but this one actually tastes amazing and I feel solid energy all day long. What I also like is that AG1's clinically backed by research. Multiple randomized
6:09 placebo-controlled clinical trials have studied AG1 next gen and including its ability to help close common nutrition gaps and support gut health. And it's incredibly simple. I just take one scoop, mix it with about 8 to 10 oz of cold water, shake it up, and I'm done. That's the kind of simple routine that's easy to stay consistent with even when life gets busy. If you want to try AG1 next gen, you can get 20% off your first subscription order using my link down below and use code back to routine to get yours now. All right, so on to number three, which is a health company, and this is Hims & Hers Health. This one has a PEG ratio of 0.8. Q2 revenue reached approximately $753 million, up 38% year-over-year, and the company's raised its full-year 2026 revenue
6:56 outlook to $3.1 billion, up to $3.3 billion. The stock's valuation is compressed significantly from previous highs, creating a potentially interesting risk versus reward setup if the company can maintain strong growth. Number four is one that you're very familiar with and it's still cheap somehow, which is crazy, especially when looking at the PEG ratio, but this is Nvidia. And this one has a PEG of 0.8. Nvidia just delivered a record $96.2 billion quarterly revenue, up 106% year-over-year, with data center revenue reaching $89 billion. Management is guiding to approximately $108 billion of revenue for the following quarter. The biggest question isn't whether Nvidia's growing, it's whether future growth can continue to exceed the extremely high
7:42 expectations already embedded in the stock price. Number five is ServiceNow. This one has a PEG at 0.6. ServiceNow generated $3.88 billion of subscription revenue in Q2, up 24.5% year-over-year. Importantly, ServiceNow AI surpassed $1 billion in annual contract value during the quarter. The opportunity is turning enterprise AI adoption into recurring software revenue at massive scale. Number six is a great company that I've liked for a long time, and this is Broadcom. Broadcom has a PEG of 0.6. Broadcom's Q2 AI semiconductor revenue reached $10.8 billion, up 143% year-over-year. Management expects AI semiconductor revenue to reach approximately $16 billion in Q3, while
8:30 Broadcom has projected more than $100 billion of AI semiconductor revenue in 2027. Custom AI accelerators and networking remain major growth drivers. Number seven is Oracle. This one has a very low PEG at 0.5. Oracle ended its latest quarter with an enormous $638 billion of remaining performance obligations, driven heavily by large AI infrastructure contracts. Oracle's cloud infrastructure business is growing rapidly, although converting that enormous RPO into revenue will require significant investment and execution. Number eight always makes me laugh because it makes me think of Super Bad, and this one is called AppLovin. AppLovin has a PEG of 0.5. It generated
9:16 $1.92 billion of Q2 revenue, up 53% year-over-year, while adjusted EBITDA reached $1.61 billion, an extraordinary 84% margin. The company continues to produce exceptional growth and cash flow, although the valuation still reflects very high expectations. Number nine has been all over the news, especially if you've been an investor this year specifically looking at memory and AI and all that. And this one would be SanDisk with a PEG of 0.4. SanDisk's latest quarter showed extraordinary momentum with revenue reaching 8.97 billion dollars up 51% sequentially. Roughly 2/3 of the sequential increase came from higher pricing while its data
10:01 center business has become a major growth driver. The key question is how durable today's elevated NAND pricing and AI-driven storage demand will be. Last but not least is one that I've talked about a lot on this channel recently and that I'm invested pretty heavy and honestly, if you look at the ETFs you're invested in, most of the growth ETFs, even things like the S&P 500, total US stock market, and definitely anything that has to do with AI or memory, this one's at the top and it's still cheap based off of PEG ratio and many other metrics as well. This one's none other than Micron. Has a very low PEG of 0.4. Micron reported record fiscal Q3 revenue of 41.5 billion dollars up 346% year-over-year with an
10:47 84.6% gross margin. Management guided to approximately 50 billion dollars of revenue and an 86% gross margin for Q4. Multi-year strategic customer agreements could also make this memory cycle more durable than previous cycles. Now, remember this because it's very very important. A low PEG ratio can highlight a potential valuation disconnect, but it should never be used by itself. Expected growth can change quickly, especially for cyclical companies, and PEG doesn't capture balance sheet strength, free cash flow, competitive advantages, dilution, cyclicality, or the quality and durability of earnings. The PEG ratio is a great starting point, not a complete investment thesis. Now, if you have been investing for a little while, you have over $100,000 invested. This is
11:34 the video to watch to get you to that next level. If you want to hit those seven figures or deep into the seven figures, you have to do something different than what you started out with in investing. Watch that video now or watch this one then remember to keep investing simplified.
