Lynch ran Fidelity's Magellan Fund to roughly 29% a year for thirteen years by refusing to choose between growth and value. His trick was a single ratio that ties the two together, and it is the master metric of SageRanks's Lynch mode: the PEG.
Between 1977 and 1990, Lynch turned Magellan into the best-performing mutual fund in the world. His books, One Up on Wall Street and Beating the Street, argued that ordinary investors have a real edge: they notice great products and rising brands in daily life long before Wall Street catches up. His famous advice, "invest in what you know," was never a licence to buy blindly. It was an invitation to start from what you understand and then do the homework.
Lynch's insight was that a price-to-earnings ratio means nothing on its own. A company on a P/E of 20 is cheap if it grows earnings at 20% a year, and expensive if it grows at 10%. The PEG ratio makes that explicit by dividing the P/E by the growth rate.
"The P/E ratio of any company that's fairly priced will equal its growth rate."
A PEG around 1.0 is fair value, below 1.0 is a potential bargain, and much above it means you are paying for growth that has to show up perfectly just to justify today's price. It is the cleanest way to buy growth without overpaying for it.
Lynch refused to treat all stocks alike. He sorted them into buckets and judged each on its own terms:
Lynch mode is at its best on profitable growers whose price has not yet caught up with their growth. It struggles exactly where PEG struggles. The ratio needs a reliable earnings figure and a credible growth estimate, so it breaks down for loss-makers, for banks and for cyclicals whose growth rate is meaningless mid-cycle. And "invest in what you know" is often misquoted as an excuse to skip the research that Lynch himself did relentlessly.
Lynch mode makes PEG its heaviest weight, backs it with revenue growth and return on equity, and adds two analyst signals at weight one each.
Where the PEG comes from matters, so here it is. We read Yahoo’s pegRatio,
which Yahoo’s own valuation table labels “PEG Ratio (5yr expected)”: the trailing P/E measured
against analysts’ consensus forecast of earnings growth over the next five years. Lynch computed the
ratio himself, from the company’s own record. This is the same arithmetic performed on somebody
else’s forecast. The clearest evidence that it is not our own calculation: 56 companies here carry
a PEG while having no trailing P/E at all, and 27 of those clear this lens’s hard limit. Samsung
Electronics sits at 0.18 without a P/E to divide.
And the analyst weights point the wrong way for Lynch. He listed “the institutions don’t own it, and the analysts don’t follow it” among the attributes of the perfect stock. We reward high coverage and bullish consensus, which is the opposite, and it is not decorative: with those two weights removed, twelve of our twenty-nine market leaders would be a different company. One of the three analyst weights was dropped on 30 August 2026 once we established that it was arithmetically the same number as another; the remaining two stay for now, and the methodology page says why.
The lens flags any company with a PEG of 1.5 or more. What it does not do — and this page said otherwise until 30 August 2026 — is fail a company whose growth is missing. A company without a PEG gets the median rank on the very metric this lens is built around, and no warning triangle at all. Eighty-five of the companies we track are in that position, and two of them currently top their market’s Lynch list.
See which companies pass Lynch's screen today →