20 Undervalued Stocks Backed by Solid Management Teams

The following is a list of undervalued stocks, with Price to Earnings Growth (PEG) ratios below 1 (based on projected earnings over the next year). In addition, the management teams mentioned below have all outperformed their competitors over the last five years, when comparing the Return on Assets, Return on Invested Capital and Return on Equity ratios.

If you believe these management teams will continue to outperform, this list might offer an interesting starting point to a value-oriented investor. What do you think? Full details below.

Management data and industry comps sourced from Fidelity, PEG ratios, short float and performance data sourced from Finviz.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research. Note: The numbers on top of items represent the forward P/E ratio, if available.

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Sorted by PEG ratio.

1. Tenet Healthcare Corp. (THC): Hospitals Industry. Market cap of $3.39B. PEG at 0.34. TTM return on equity at 168.40% vs. industry average at 18.70%. TTM return on assets at 13.27% vs. industry average at 6.40%. TTM return on investments at 20.10% vs. industry average at 10.84%. Short float at 2.44%, which implies a short ratio of 0.96 days. The stock has gained 31.2% over the last year.

2. American Capital, Ltd. (ACAS): Asset Management Industry. Market cap of $2.98B. PEG at 0.36. TTM return on equity at 25.77% vs. industry average at 11.40%. TTM return on assets at 11.30% vs. industry average at 2.47%. TTM return on investments at 11.65% vs. industry average at 4.35%. Short float at 3.96%, which implies a short ratio of 4.43 days. The stock has gained 147.31% over the last year.

3. Bridgepoint Education, Inc. (BPI): Education & Training Services Industry. Market cap of $995.31M. PEG at 0.36. TTM return on equity at 67.70% vs. industry average at 33.59%. TTM return on assets at 33.39% vs. industry average at 14.30%. TTM return on investments at 67.70% vs. industry average at 25.51%. Short float at 18.91%, which implies a short ratio of 30.98 days. The stock has gained 24.98% over the last year.

4. Kulicke & Soffa Industries Inc. (KLIC): Semiconductor Equipment & Materials Industry. Market cap of $709.1M. PEG at 0.38. TTM return on equity at 49.65% vs. industry average at 29.77%. TTM return on assets at 26.64% vs. industry average at 16.43%. TTM return on investments at 34.20% vs. industry average at 19.57%. Short float at 4.11%, which implies a short ratio of 1.45 days. The stock has gained 33.11% over the last year.

5. Tower Group Inc. (TWGP): Property & Casualty Insurance Industry. Market cap of $1.11B. PEG at 0.45. TTM return on equity at 10.28% vs. industry average at 8.26%. TTM return on assets at 3.08% vs. industry average at 1.92%. TTM return on investments at 8.12% vs. industry average at 6.75%. Short float at 10.01%, which implies a short ratio of 16.32 days. The stock has gained 19.66% over the last year.

6. Ares Capital Corporation (ARCC): Diversified Investments Industry. Market cap of $3.35B. PEG at 0.54. TTM return on equity at 29.08% vs. industry average at 11.41%. TTM return on assets at 18.32% vs. industry average at 2.48%. TTM return on investments at 18.85% vs. industry average at 4.35%. Short float at 1.94%, which implies a short ratio of 2.42 days. The stock has gained 54.21% over the last year.

7. SMART Modular Technologies Inc. (SMOD): Semiconductor Industry. Market cap of $446.75M. PEG at 0.55. TTM return on equity at 19.17% vs. industry average at 9.70%. TTM return on assets at 11.18% vs. industry average at 6.45%. TTM return on investments at 16.13% vs. industry average at 9.02%. Short float at 4.14%, which implies a short ratio of 1.91 days. The stock has gained 0.85% over the last year.

8. ITT Educational Services Inc. (ESI): Education & Training Services Industry. Market cap of $2.17B. PEG at 0.55. TTM return on equity at 258.33% vs. industry average at 33.59%. TTM return on assets at 56.99% vs. industry average at 14.30%. TTM return on investments at 126.91% vs. industry average at 25.51%. Short float at 19.58%, which implies a short ratio of 6.95 days. The stock has lost -30.97% over the last year.

9. Fuel Systems Solutions, Inc. (FSYS): Auto Parts Industry. Market cap of $502.17M. PEG at 0.56. TTM return on equity at 23.38% vs. industry average at 11.02%. TTM return on assets at 14.27% vs. industry average at 4.49%. TTM return on investments at 21.51% vs. industry average at 7.79%. Short float at 24.89%, which implies a short ratio of 11.5 days. The stock has lost -6.5% over the last year.

10. Sanderson Farms, Inc. (SAFM): Meat Products Industry. Market cap of $955.28M. PEG at 0.58. TTM return on equity at 23.30% vs. industry average at 17.13%. TTM return on assets at 17.50% vs. industry average at 7.04%. TTM return on investments at 19.97% vs. industry average at 10.40%. Short float at 14.93%, which implies a short ratio of 7.99 days. The stock has lost -15.22% over the last year.

11. Cyberonics Inc. (CYBX): Medical Appliances & Equipment Industry. Market cap of $928.02M. PEG at 0.59. TTM return on equity at 42.89% vs. industry average at 15.28%. TTM return on assets at 32.56% vs. industry average at 8.33%. TTM return on investments at 38.78% vs. industry average at 12.42%. Short float at 6.06%, which implies a short ratio of 7.4 days. The stock has gained 77.3% over the last year.

12. Ultra Petroleum Corp. (UPL): Independent Oil & Gas Industry. Market cap of $7.19B. PEG at 0.6. TTM return on equity at 59.27% vs. industry average at 23.34%. TTM return on assets at 19.40% vs. industry average at 8.96%. TTM return on investments at 22.87% vs. industry average at 17.11%. Short float at 7.5%, which implies a short ratio of 8.3 days. The stock has lost -3.44% over the last year.

13. SCBT Financial Corp. (SCBT): Regional Bank. Market cap of $397.77M. PEG at 0.69. TTM return on equity at 15.55% vs. industry average at 10.63%. TTM return on assets at 1.43% vs. industry average at 0.77%. TTM return on investments at 13.23% vs. industry average at 3.44%. Short float at 3.88%, which implies a short ratio of 20.18 days. The stock has lost -11.6% over the last year.

14. AMERIGROUP Corporation (AGP): Health Care Plans Industry. Market cap of $2.74B. PEG at 0.69. TTM return on equity at 22.42% vs. industry average at 18.70%. TTM return on assets at 11.29% vs. industry average at 6.40%. TTM return on investments at 18.12% vs. industry average at 10.84%. Short float at 12.27%, which implies a short ratio of 8.66 days. The stock has gained 118.28% over the last year.

15. Walter Investment Management Corp. (WAC): Asset Management Industry. Market cap of $498.65M. PEG at 0.74. TTM return on equity at 6.10% vs. industry average at 0.60%. TTM return on assets at 1.89% vs. industry average at 1.38%. TTM return on investments at 1.94% vs. industry average at 1.52%. Short float at 3.43%, which implies a short ratio of 7.28 days. The stock has gained 35.88% over the last year.

16. USANA Health Sciences Inc. (USNA): Drug Related Products Industry. Market cap of $536.59M. PEG at 0.74. TTM return on equity at 39.69% vs. industry average at 32.68%. TTM return on assets at 26.81% vs. industry average at 10.27%. TTM return on investments at 38.12% vs. industry average at 17.20%. Short float at 6.28%, which implies a short ratio of 10.35 days. The stock has gained 23.76% over the last year.

17. Aeropostale, Inc. (ARO): Apparel Stores Industry. Market cap of $2.29B. PEG at 0.77. TTM return on equity at 51.89% vs. industry average at 12.81%. TTM return on assets at 29.91% vs. industry average at 9.01%. TTM return on investments at 51.89% vs. industry average at 14.89%. Short float at 7.74%, which implies a short ratio of 2.2 days. The stock has gained 11.47% over the last year.

18. Whirlpool Corp. (WHR): Appliances Industry. Market cap of $6.5B. PEG at 0.78. TTM return on equity at 15.82% vs. industry average at 4.08%. TTM return on assets at 4.06% vs. industry average at 3.09%. TTM return on investments at 9.50% vs. industry average at 5.47%. Short float at 8.94%, which implies a short ratio of 4.07 days. The stock has gained 6% over the last year.

19. Chimera Investment Corporation (CIM): REIT. Market cap of $3.71B. PEG at 0.81. TTM return on equity at 18.65% vs. industry average at 0.60%. TTM return on assets at 7.62% vs. industry average at 1.38%. TTM return on investments at 7.95% vs. industry average at 1.52%. Short float at 4.27%, which implies a short ratio of 2.72 days. The stock has gained 33.33% over the last year.

20. RLI Corp. (RLI): Property & Casualty Insurance Industry. Market cap of $1.18B. PEG at 0.85. TTM return on equity at 14.94% vs. industry average at 8.12%. TTM return on assets at 4.91% vs. industry average at 1.91%. TTM return on investments at 12.93% vs. industry average at 6.64%. Short float at 7.13%, which implies a short ratio of 7.82 days. The stock has gained 23.47% over the last year.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.