High-Conviction Non-Tech Growth Stocks: 8 Undervalued Gems with Strong Earnings Momentum and Attractive PEG Ratios

In an era where the S&P 500 trades at a forward P/E of 27.17—well above its 10-year average of 19.08—investors are increasingly compelled to seek value beyond the dominant tech giants. While high-growth technology stocks have driven much of the market's recent gains, their elevated valuations leave little room for error. This is where growth-at-a-reasonable-price (GARP) investing in non-tech sectors shines. By focusing on companies with strong earnings momentum and attractive PEG ratios, investors can capitalize on mispriced opportunities in sectors like Financials, Energy, and Industrials. Below, we highlight eight such stocks that exemplify this strategy.

The Case for GARP in Non-Tech Sectors

The GARP approach balances growth potential with valuation discipline, avoiding the extremes of pure value or pure growth investing. In 2025, non-tech sectors offer compelling entry points:
- Financials (XLF): Forward P/E of 16.74 vs. S&P 500's 21.28, with a PEG ratio of 1.51.
- Energy (XLE): Forward P/E of 14.91 and a PEG of 1.59, despite structural risks like energy transition.
- Industrials (XLI): Forward P/E of 22.44 and a PEG of 1.88, supported by cyclical demand.

These sectors trade at discounts to the broader market, offering a margin of safety while still delivering growth.

8 High-Conviction Non-Tech Stocks for 2025

1. Synchrony Financial (SYF)

• Sector: Financials
• PEG Ratio: 0.5
• P/E Ratio: 8.68
• Key Drivers: A leader in consumer finance, SYF benefits from a robust credit card and retail finance ecosystem. Its low PEG ratio reflects undervaluation relative to its 11.11% earnings growth forecast.

2. Devon Energy (DVN)

• Sector: Energy
• PEG Ratio: 0.7
• P/E Ratio: 7.57
• Key Drivers: As oil prices stabilize and operational efficiency improves, DVN's 9.37% earnings growth is undervalued. Its focus on U.S. shale assets positions it for long-term cash flow.

3. Universal Health Services (UHS)

• Sector: Healthcare (Industrials)
• PEG Ratio: 0.6
• P/E Ratio: 9.4
• Key Drivers: UHS's dominance in for-profit hospital management ensures steady cash flow. Its 11.91% earnings growth is supported by demographic-driven demand for healthcare services.

4. AES Corporation (AES)

• Sector: Energy (Utilities)
• PEG Ratio: 0.8
• P/E Ratio: 9.48
• Key Drivers: AES's pivot to renewable energy and grid modernization aligns with decarbonization trends. Its 9.37% earnings growth is undervalued in a sector often overlooked for innovation.

5. PulteGroup (PHM)

• Sector: Industrials (Homebuilding)
• PEG Ratio: 0.65
• P/E Ratio: 9.64
• Key Drivers: The housing boom continues to fuel PHM's margins. Its 11.91% earnings growth is supported by strong demand and disciplined cost management.

6. Halliburton (HAL)

• Sector: Energy (Oilfield Services)
• PEG Ratio: 0.75
• P/E Ratio: 9.91
• Key Drivers: HAL's technological edge in oilfield services and cost efficiency drive its 9.37% earnings growth. The sector's cyclical nature offers upside as energy demand persists.

7. Edison International (EIX)

• Sector: Utilities (Industrials)
• PEG Ratio: 0.8
• P/E Ratio: 8.17
• Key Drivers: EIX's utility subsidiary, Southern California Edison, benefits from infrastructure spending and clean energy transitions. Its 9.37% earnings growth is undervalued in a stable sector.

8. Delta Air Lines (DAL)

• Sector: Industrials (Airlines)
• PEG Ratio: 0.8
• P/E Ratio: 8.7
• Key Drivers: As global travel rebounds, DAL's 11.91% earnings growth is supported by improved load factors and fuel efficiency. Its low PEG ratio reflects optimism about the sector's recovery.

Why These Stocks Matter

The selected companies share common traits:
- Strong Earnings Momentum: All eight have earnings growth forecasts exceeding 9%, outpacing the S&P 500's 12.24% growth but at lower valuations.
- Attractive PEG Ratios: With PEGs ranging from 0.5 to 0.8, these stocks trade at discounts to their growth potential.
- Diversification: Spanning Financials, Energy, and Industrials, they reduce sector-specific risks while capturing macroeconomic tailwinds.

Investment Advice

For investors seeking to balance growth and valuation discipline, these stocks offer a compelling mix of upside potential and downside protection. While the energy transition and economic cycles introduce risks, the current valuations provide a margin of safety. A diversified portfolio including these names could outperform the overvalued S&P 500 over the next 3–5 years, particularly if interest rates stabilize and earnings growth accelerates.

In conclusion, the GARP approach in non-tech sectors is not about chasing the next tech unicorn but about identifying companies that deliver consistent growth at reasonable prices. As the market reorients from speculative tech bets to fundamentals-driven investing, these eight stocks stand out as undervalued gems with the potential to deliver robust long-term returns.