Image source: Flickr user Steve Wilson. 

When the stock market was in nearly nonstop rally mode for most of the past six years, investors didn't need to look far to uncover an abundance of growth stocks. But not all growth stocks are created equal: while some appear poised to deliver extraordinary gains going forward, the recent market turbulence has crushed some that were overvalued, burdening investors with hefty losses.

What exactly is a growth stock? I'll define a growth stock as any company forecast to grow profits by 10% or more annually during the next five years -- although that's an arbitrary number. To decide what's "cheap," I'll use the PEG ratio, which compares a company's price-to-earnings ratio to its future growth rate. Any figure around or below one could signal a cheap stock.

Here are three companies that fit the bill.

Qiwi
Some of the market's best cheap growth stocks can be found in the small-cap category, and that's precisely what I believe investors are getting with payment processing facilitator Qiwi (QIWI 9.88%).

Qiwi operates as an electronic payment processing facilitator in the U.S., as well as Russia, Belarus, the UAE, Kazakhstan, and a handful of other countries. Its biggest issue recently has been weakness in Russia's economy and its ex-Soviet territories. The devaluation of the Russian ruble, along with the precipitous decline in oil prices, has been a drag on the Russian economy, and currency fluctuations have weighed on Qiwi's guidance. In early February the company reduced its full-year 2015 guidance modestly from prior forecasts.

Although the upcoming year will likely be challenging, there are reasons to believe that this weakness creates a buying opportunity.


Image source: Qiwi Russia. 

Qiwi's biggest opportunity is the Russian market, where credit card and identity theft rates are high enough to dissuade consumers from making payments or buying products online. Qiwi's kiosks provide a way for Russia and its neighbors to turn cash into digital transactions. They can pay utility bills, buy goods, and even purchase credits for services like Skype. For businesses not dealing in cash, these kiosks are a perfect workaround, since many will accept these digital transactions as payment. Furthermore, with just 15% of Russians carrying credit cards, there's a massive marketing opportunity available to Qiwi.

Qiwi also has a very healthy balance sheet that's conducive to further kiosk expansion. As of its September-ended quarter, the company boasted $532 million in cash compared to $25 million in debt. It can essentially use its operating cash flow to fund kiosk innovation and expansion.

With Qiwi projecting (lowered) top-line growth of 15%-16% in 2015, and adjusted profit growth of 16% to 18%, it should have your attention. When you figure out that it's trading at roughly 10 times forward earnings and is sporting a PEG ratio below one, I dare you not to be intrigued.

Ferro Corporation
Ferro (FOE) may get bonus points for having one of the best ticker symbols (FOE), but it's been pummeled lately by an unforgiving investor base.

Ferro is a supplier of pigments and colors, glass-based coatings, polishing materials, and technology-based performance materials that are used by the construction, automotive, household, industrial, and electronics sectors. In short, it depends on global growth to drive demand -- and the global economy hasn't been on point of late. China's annual GDP growth in 2015 was its weakest in 25 years, Russia and Brazil are expecting their GDPs to contract, and the EU is still struggling as a whole. Dealing with adverse currency moves and an unpredictable global growth climate, Ferro's recently released 2016 full-year EPS forecast of $0.95 to $1 fell short of the $1.06 Wall Street had expected.

But like Qiwi above, patience could very well pay off for the long-term investor.


Image source: Ferro Corporation.

Ferro has undertaken a number of strategies to grow its top- and bottom-line and improve its outlook. For instance, the company is looking to grow organically as well as by acquisition. It recently purchased a tile coatings manufacturer in Egypt, and in July it wrapped up a $165 million purchase of Nubiola Pigmentos, a performance materials provider of glass-based coatings, as well as pigments and colors. The company plans to devote around $100 million annually to acquisitions, which could help to quickly diversify its product portfolio and customer base and also make the company a little more recession-resistant. Plus, the fact that it's acquiring companies around the globe may help improve its geographic revenue diversification.

Ferro has also taken steps to bolster shareholder value through cost cuts and a share repurchase program. Ferro's cost controls resulted in a 180 basis point adjusted gross profit margin expansion in fiscal 2015, which is what helped push its adjusted EPS higher by 37% year-over-year. It also announced a $25 million share buyback, which is on top of the $31.6 million in common stock purchased during Q4 2015 and the $11.4 million it's already repurchased since the year began. Share buybacks help lower the number of outstanding shares and can boost EPS.

Valued at less than nine times forward earnings, and also sporting a sub-one PEG ratio, Ferro is a cheap growth stock potentially worthy of even the pickiest investor's attention.

Ambarella
Finally, I'd suggest growth investors looking for attractive value keep their eyes on Ambarella (AMBA -3.42%), a developer and supplier of compression and image-processing semiconductor solutions for a variety of industries.

Image source: GoPro.

Over the past year Ambarella shares have been taken to the woodshed. Since peaking around $129 intraday in June, Ambarella shares have recently dipped as low as $33. The reason is weakness in some of the company's wearable sports vendors, namely GoPro (GPRO -2.86%). Roughly four weeks ago GoPro announced that Q4 sales fell 31% year-over-year, badly missing Wall Street's expectations. Software conveniences/issues that affect consumers' ability to download and edit content affected sales, and sluggish sales of its Session devices also hurt. While far from doomed, it could be multiple quarters before GoPro finds its footing, which is clearly not great news for Ambarella.

Image source: TASER International.

However, Ambarella has exciting growth opportunities that extend well beyond sports wearables. Consider the growth opportunities the company possesses in on-body wearables for law enforcement agencies, as well as for drone cameras, the automotive industry via dash cameras, and professional security cameras. For instance, TASER International (AXON -1.34%), a manufacturer of tasers and Axon-brand on-body cameras, saw its Axon brand deliver 150% year-over-year growth in Q3 2015. TASER also announced the deployment of roughly 8,500 cameras in Q3. The growth potential for on-body cameras could actually outpace sports wearables, leaving Ambarella in great shape. 

In addition, Ambarella has the cash flow to grow inorganically, just like Ferro. In July, Ambarella announced that it had gobbled up VisLab, a company working on autonomous driving assistance systems. In other words, driverless cars could now mean a boost in business for Ambarella.

Despite some recent rockiness, Ambarella's PEG ratio of 0.7 and its forward P/E of 15 make it look quite attractive.