The Telecom Services - Foreign industry contains a few standout stocks with very low (undervalued) Price/Earnings/Growth (PEG) ratios right now. Brasil Telecom Participacoes S/A. (BRP) leads the pack with a P/E/G ratio of 0.22. By comparison, Telefonica SA (TEF) and Siemens AG (SI) have P/E/G ratios of 1.06 and 1.34 respectively. Looking for those stocks---such as Brasil Telecom Participacoes S/A.---with undervalued ratios may offer the potential for more upside in a struggling stock market.

Stock valuations are confusing right now to say the least but there are some best practice methods to get an approximation for whether a stock is over or undervalued. Most investors have moved beyond the basic P/E ratio and now use ratios like the P/E/G ratio popularized by Peter Lynch.

The concept is that a stock with a price to earnings ratio (P/E) that equals or is smaller than its growth rate is fairly or undervalued. Therefore, a P/E/G ratio that is equal to 1 or less is probably at a reasonable share price.

Stocks with higher P/E/G ratios tend to be very volatile so looking for companies with more "fair" valuations could smooth portfolio returns and reduce overall risk. You can learn more about fundamental analysis and valuation ratios for free here.

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