"Market commentators and investment managers who glibly refer to 'growth' and 'value' styles as contrasting approaches to investment are displaying their ignorance, not their sophistication. Growth is simply a component -- usually a plus, sometimes a minus -- in the value equation." -- Warren Buffett

I'm actually borrowing the quote above from Oakmark Fund's Bill Nygren who, in turn, had borrowed it from Buffett earlier this year. Oakmark posted a late-March commentary titled "Nygren on Value, Growth and Today's Markets," which, not surprisingly, addressed the relationship between growth and value.

Nygren basically expanded on Buffett's quote, explaining the how and why of growth simply being an element of a company's value, as opposed to a completely different approach to investing. As far as this view being put to work in Oakmark's investing, Nygren summed it up like this:

We are always buying what we believe is cheap and selling what we believe is expensive. As the price investors pay for growth becomes excessive, our price discipline moves us away from growth. As the price for growth declines, our discipline moves us toward higher growth businesses.

This view is more than academic for Nygren. The Oakmark Fund that he manages holds positions in companies such as MasterCard, McDonald's (NYSE: MCD), and Apple (Nasdaq: AAPL), all of which could easily be classified as "growth" stocks. And he's continued down that path, adding search king Google (Nasdaq: GOOG) to Oakmark's portfolio during the second quarter.

Growth and value playing nice
The PEG ratio -- also sometimes referred to as the Fool ratio -- relates a stock's valuation to its growth rate through this simple equation:

            Price-to-Earnings Multiple / (Growth Rate * 100)

The most simplistic analysis of the PEG ratio says that if the P/E equals the growth rate -- that is, the PEG equals one -- then the stock is fairly valued. A result below one makes it a good deal, while anything above one starts to look pricey.

In the past I've highlighted the fact that the PEG ratio isn't a perfect touchstone that gives us foolproof insight into what stocks are good buys. However, what it reliably offers is a good starting point for identifying potential bargains.

You can defy categorization, too
With this in mind, I dug up a handful of stocks that currently bring growth and value together in a way that investors on both sides of the fence should be itching to jump on them.

What I was looking for specifically was an expected growth rate above 10%, a forward PEG below one, and an attractive business.


Expected Long-Term Growth

Forward P/E


Logitech (Nasdaq: LOGI) 28.5% 12.2 0.43
hhgregg (NYSE: HGG) 18% 9.8 0.54
Whirlpool (NYSE: WHR) 12.2% 6.8 0.56
Apple 22.6% 13.5 0.6
Google 17.6% 15.3 0.87

Source: Capital IQ, a Standard & Poor's company.

What I said earlier bears repeating here: A low PEG is no guarantee that you've found a great investment. In fact, sometimes the PEG can lead you into a trap if growth estimates are unreasonably high and the low P/E only means that the rest of the market already knows that the company will never live up to those estimates.

The hope though, is that through some thoughtful research you can determine if the growth is reasonable. Assuming that's the case, a low PEG ratio provides a cushion if things don't work out quite as you imagined -- or extra return potential if they do.

In the case of both Oakmark holdings above -- Google and Apple -- it seems pretty clear that the market doubts that they can deliver on those growth rates. History would suggest otherwise though, as both have grown well in excess of those rates over the past five years. It's also notable that if you back cash out of the price for these companies -- something that Nygren does in his analysis of Google -- the valuations look even more mouthwatering.

As for Logitech, investors may be concerned that a changing technological landscape may leave this mouse expert in the dust. While I have to admit some skepticism at the analysts' estimated growth rates, there will continue to be a need for products that allow users to interact with their digital devices -- such as Apple's keyboard-challenged iPads.

Meanwhile, hhgregg has followed its larger competitor Best Buy (NYSE: BBY) (which is an Oakmark holding as well) down the slippery slope of consumer weakness. Admittedly, it's a little tough to be optimistic about the consumer at the moment, but if (when?) Average Joe is willing to spend again, the small size of hhgregg means that it has a lot of room for growth.

Consumers are similarly concerned for Whirlpool since it relies mainly on that group to take home its laundry machines and refrigerators. However, with a global footprint, including 25% of sales coming from Latin America and a growing contribution from China and the rest of Asia, the situation in the U.S. isn't all that counts when it comes to Whirlpool's growth.

Whether you count yourself as a growth investor, a value investor, or realize that it's all really the same, I think there's a stock on this list to pique your interest. But unless you're already very familiar with the company, my suggestion would be to add the stock(s) to your watchlist and dig in further before pulling the trigger.

The Motley Fool owns shares of Apple, Google, Logitech International, and Best Buy. Motley Fool newsletter services have recommended buying shares of Apple, Google, Logitech International, McDonald's, Best Buy, and hhgregg. Motley Fool newsletter services formerly recommended Best Buy. Motley Fool newsletter services have recommended creating a write covered call position in Logitech International and a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool contributor Matt Koppenheffer owns shares of McDonald's, but does not have a financial interest in any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy is responsible for all of the italicized words you just read.