High Growth ROE Low PE — Undervalued US Compounders on NYSE & NASDAQ

US stocks simultaneously showing EPS growth above 15%, ROE above 15%, P/E below 20, and D/E below 1. This targets the rare intersection of genuine earnings growth, high-quality capital returns, and reasonable valuation — growing, efficient businesses the market hasn't yet fully priced. These situations arise from sector pessimism, overlooked mid-caps, or earnings acceleration not widely recognized.

High ROE can be artificially produced by financial leverage. A company borrowing at 5% to deploy at 20% ROE looks excellent until credit conditions tighten. D/E below 1 ensures the 15%+ ROE reflects genuine operational excellence — exceptional returns from the actual business, not financial engineering. This makes the quality signal significantly more durable.

At the exact threshold: P/E of 20 with 15% EPS growth gives PEG of 1.33 — slightly above Lynch's fair-value PEG of 1.0, but still well within GARP territory for quality businesses. Stocks showing 25%+ EPS growth at P/E below 20 (PEG below 0.8) are the most compelling within this screen — well into undervalued GARP territory.

GARP (Growth at Reasonable Price) is the formal name for the strategy this screen implements. Peter Lynch defined GARP as finding companies with meaningful earnings growth at P/E multiples that don't fully reflect the growth rate — effectively PEG below 1.0–1.5. This screen adds the ROE quality filter that pure GARP screens often omit, making it a quality-GARP approach.

Several reasons: investor skepticism that growth is sustainable, sector-wide pessimism, small or mid-cap underownership by institutions, recent management change creating temporary uncertainty, or one-time charges reducing GAAP earnings without affecting cash generation. Each scenario requires different investment conviction and research to resolve.

Historical EPS growth — comparing the most recent trailing twelve months EPS to the prior year EPS. TTM growth reflects what has already happened, providing factual evidence rather than analyst estimates. For best analysis, verify both: the screen confirms historical momentum, and forward consensus estimates indicate whether it's expected to continue.

Low PE High ROE (P/E < 15, ROE > 15%) focuses on the value-quality combination without requiring earnings growth. High Growth ROE Low PE adds the growth dimension explicitly and uses a slightly higher P/E cap of 20 to accommodate growing businesses. Stocks appearing on both screens have especially strong combined quality signals.

P/E of 20 means you pay $20 for every $1 of current earnings — a 5% earnings yield. Historically, the S&P 500 long-run average P/E is approximately 16–18, though it has spent extended periods above 20 in low-rate environments. P/E below 20 with 15%+ earnings growth is a strong value-growth combination by any historical market standard.

Yes. When a sector consistently produces many stocks meeting all criteria — high growth, high ROE, low P/E — it may signal the entire sector is undervalued relative to quality and growth. If financials or healthcare produce 20+ stocks on this screen while technology produces 2, that relative signal is worth incorporating into top-down sector allocation.

Typically 30–80 US stocks at any given time. During market corrections when quality stocks are broadly sold, the count rises. During bull markets where quality commands premiums, the count shrinks. The natural scarcity reflects the genuine rarity of finding growing, high-quality businesses priced at modest multiples simultaneously.