I’ve been running a PEG filter across the constituents of the FTSE indices again and it keeps throwing up some tempting candidates. The PEG ratio compares a share’s current P/E valuation with its expected earnings growth rate, looking for shares that appear cheap compared to that growth — anything around 0.7 or less is usually considered a good indicator.

Equipment rental firm Ashtead Group (LSE: AHT) has grown its earnings remarkably strongly over the past five years, and the 27% EPS growth forecast for the year to April 2016 would put the shares on a modest P/E of 11.6 and give us a PEG of only 0.4. And 2017 forecasts drop the P/E to under 10 and maintain the PEG at 0.5.

The shares had perked up a bit ahead of today’s third-quarter update and the firm did report a 20% rise in pre-tax profit for the nine months, to £482m, after rental revenue grew by 17%. The full year should be in line with expectations. But the share price was down 13% to 800p by mid-morning, hit by the company’s plans to reduce capital expenditure next year.

There may still be weakness in Ashtead’s US markets, but at today’s price the shares look oversold to me.

Healthy growth

Another that keeps showing up is NMC Health (LSE: NMC), which has yet to release 2015 results. But with the shares priced at 885p, expectations of a 33% rise in EPS put them on a P/E of 22.4 — and a PEG spot on that sought-after 0.7 level. And it gets better — a forecast for 2016 of a further 42% EPS growth would drop the P/E to 16 and the PEG to 0.4. For 2017 we’d end up with a P/E of 13 and a PEG of 0.6. So what does it do?

It’s a healthcare chain in the United Arab Emirates and benefited from demand led by the oil boom of the 80s. Today it has more diverse interests too, with 50% of its turnover in 2014 coming from distribution and other services. Unless the UAE runs out of oil in the next few years, NMC looks like a safe growth prospect.

Poised for the future

WS Atkins (LSE: ATK) counts a role as a contractor to the London Underground among the diverse support services it offers to a number of sectors. It has seen its share price dip by 23% since its recent peak in December, to 1,282p. That’s despite several years of earnings growth already under its belt and with three more forecast.

There’s only a 1% EPS rise forecast for the year to March 2016, but for 2017 there’s a 15% uptick pencilled-in, which would put the P/E on around 11 and give us a PEG of 0.8 — a fraction outside the traditional 0.7 cutoff, but still attractive.

A Q3 update on 10 February told us of “headwinds” in some of Atkins’ markets, but the firm reckons that operating margins are improving, and it’s in some key markets that it should benefit from the ongoing economic recovery.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.