The Hidden Value Zone (HVZ): Reconciling PEG and PPP in Stock Valuation for Detecting Undervaluation Overlooked by Traditional Metrics
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The Hidden Value Zone (HVZ) is a novel concept in stock valuation derived from the Potential Payback Period (PPP). It highlights the divergence between the linear, simplistic approach of the PEG ratio and the logarithmic, financially consistent framework of the PPP. The HVZ identifies stocks that are dismissed as overvalued by PEG but that, under PPP, reveal strong earning power and are therefore undervalued. This article develops the theoretical foundations of the HVZ, provides a graphical representation, and validates its relevance through the exceptional performances of NVIDIA and Palantir Technologies from early 2024 to September 2025. The HVZ thus emerges as a powerful tool for detecting undervaluation overlooked by traditional metrics.