At a time when volatility strikes every second day, investors often rely on value investing rather than other options like growth or momentum. As soon as other investors start selling their stocks at a cheaper rate in times of market uncertainty, value investors take this as an opportunity to pick good stocks at a discounted price.

Several stocks that have surged significantly in the recent past have shown the overwhelming success of this pure-play investment strategy. Here, we discuss four such stocks: Omnicell (OMCL Quick QuoteOMCL - Free Report) , Sandisk Corporation (SNDK Quick QuoteSNDK - Free Report) , Avnet, Inc. (AVT Quick QuoteAVT - Free Report) and Marathon Petroleum (MPC Quick QuoteMPC - Free Report) .

However, this apparently simple value investment technique has some drawbacks and not understanding the strategy properly may often lead to “value traps.” In such a situation, these value picks start to underperform over the long run as the temporary problems, which once drove the share price down, turn out to be persistent.

There are many value investment yardsticks, such as dividend yield, P/E or P/B, which are simple and can single out whether a stock is trading at a discount.

However, for investors looking to escape such value traps, it is also vital to determine where the stock would be headed in the next 12 to 24 months. Warren Buffett advises these investors to focus on the earnings growth potential of a stock. This is where lies the importance of a not-so-popular value investing metric, the PEG ratio.

PEG Ratio at a Glance

The PEG ratio is defined as (Price/ Earnings)/Earnings Growth Rate

A low PEG ratio is always better for value investors.

While P/E alone fails to identify a true value stock, PEG helps find the intrinsic value of a stock.

There are some drawbacks to using the PEG ratio. It doesn’t consider the very common situation of changing growth rates, such as the forecast of the first three years at a very high growth rate, followed by a sustainable but lower growth rate over the long term.

Hence, PEG-based investing can turn out to be even more rewarding if some other relevant parameters are also taken into consideration.

Here are some of the screening criteria for a winning strategy:

PEG Ratio less than X Industry Median

P/E Ratio (using F1) less than X Industry Median (for more accurate valuation purposes)

Zacks Rank #1 (Strong Buy) or 2 (Buy) (Whether good market conditions or bad, stocks with a Zacks Rank #1 or 2 have a proven history of success.)

Market Capitalization greater than $1 billion (This helps us to focus on companies that have strong liquidity.)

Average 20-Day Volume greater than 50,000 (A substantial trading volume ensures that the stock is easily tradable.)

Percentage Change F1 Earnings Estimate Revisions (4 Weeks) greater than 5% (Upward estimate revisions add to the optimism, suggesting further bullishness.)

Value Score of less than or equal to B: Our research shows that stocks with a Style Score of A or B when combined with a Zacks Rank #1, 2 or 3 (Hold) offer the best upside potential. 

Our PEG-Driven Picks

Here are four stocks that qualified the screening:

Omnicell: It is headquartered in Fort Worth, TX, develops medication management and adherence solutions for healthcare systems and pharmacies. Its offerings include automated dispensing, pharmacy storage and packaging, bedside automation, physician order management and analytics tools, designed to enhance patient safety, improve efficiency, reduce costs and support regulatory compliance.

Omnicell currently has a Zacks Rank #1 and a Value Score of B. OMCL also has an impressive five-year expected growth rate of 24.4%.

Sandisk: Headquartered in Milpitas, CA, Sandisk develops NAND flash-based storage solutions, including SSDs, embedded products, memory cards, USB drives and components. Its products serve three end markets: datacenters, edge applications spanning PCs, mobile, automotive and industrial uses, and consumer retail markets. The company became an independent publicly traded entity on Feb. 21, 2025, under the ticker SNDK.

Sandisk currently has a Zacks Rank #2 and a Value Score of A. Sandisk also has an impressive five-year expected growth rate of 57%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Avnet: Headquartered in Phoenix, AZ, Avnet is a global distributor of electronic components and computer products, serving customers in more than 140 countries. Its two segments, Electronic Components and Farnell, provide semiconductors, IP&E devices, supply chain management, engineering design services, embedded solutions and electronic components to OEMs, manufacturers, resellers, engineers and entrepreneurs.

Apart from a discounted PEG and P/E, AVT currently has a Zacks Rank #1 and a Value Score of B. Avnet has a long-term expected growth rate of 31.3%.

Marathon Petroleum: Findlay, OH-based Marathon Petroleum is a leading U.S. refiner, transporter and marketer of petroleum products, operating through Refining and Marketing, Midstream, and Renewable Diesel segments. Its extensive refining footprint, integrated logistics network, advantaged crude access and higher-value product investments support margin optimization, strong cash generation, improving capital returns and shareholder distributions.

MPC currently has a Zacks Rank #2 and a Value Score of A. Marathon Petroleum also has an impressive five-year expected growth rate of 59.5%.