4 PEG-Based Value Stocks to Buy as Investors Look Beyond AI

As August draws to a close, the stock market is hovering near record levels, even as elevated Treasury yields, persistent inflation concerns and softer economic signals add to uncertainty. At the same time, recent gains have been heavily concentrated in technology and AI stocks, leaving many fundamentally sound companies outside the market’s strongest-performing areas. This divergence is creating an opportunity for investors to look beyond high-momentum names and seek quality businesses whose stocks are trading at more reasonable valuations.

Against this backdrop, value investing can offer an attractive approach. When market uncertainty prompts investors to sell fundamentally sound companies, their shares can become available at discounted valuations. Value investors seek to capitalize on such dislocations by identifying stocks whose market prices do not fully reflect their underlying earnings potential.

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 — Dollar General DG, Envista Corporation NVST, Match Group MTCH and The Allstate Corp. ALL.

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 the importance of a not-so-popular value investing metric, the PEG ratio, lies.

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:

Dollar General: Headquartered in Goodlettsville, TN, Dollar General is one of the largest discount retailers in the United States. The company sells low-priced merchandise, typically $10 or less. Dollar General offers a wide selection of merchandise, including consumable items, seasonal items, home products and apparel.

Dollar General has a Zacks Rank #2 and a Value Score of A. DG also has an impressive five-year expected growth rate of 8.9%.

Envista: Headquartered in Brea, CA, Envista provides dental solutions through more than 30 brands, including Nobel Biocare, Ormco, DEXIS and Kerr. Its Specialty Products & Technologies segment, which generated 64.4% of 2025 revenues, offers dental implants, orthodontic products, aligners, prosthetics, treatment software and related technologies.

NVST currently has a Zacks Rank #1 and a Value Score of B. Envista also has an impressive five-year expected growth rate of 13.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Match Group: Based in Dallas, TX, Match Group is a global provider of digital technologies designed to help people make meaningful connections. The company has several promising growth drivers, led by Hinge, where product innovation, international expansion and additional monetization opportunities support long-term potential.

MTCH currently has a Zacks Rank #1 and a Value Score of A. Match Group also has an impressive five-year expected growth rate of 20.7%.

Allstate: Headquartered in Northbrook, IL, Allstate is the third-largest property and casualty (P&C) insurer and largest publicly held personal-lines carrier in the United States, serving approximately 16 million households. In 2025, revenues rose to $67.7 billion, supported by continued growth in P&C premiums and higher net investment income.

Apart from a discounted PEG and P/E, ALL currently has a Zacks Rank #1 and a Value Score of A. Allstate has a long-term expected growth rate of 19%.

Why Haven't You Looked at Zacks' Top Stocks?

Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.

Today you can access their live picks without cost or obligation.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research