A still-slow economy is making it quite hard for companies to grow.

As I noted earlier this week, just a few dozen companies in the S&P 500 are expected to boost sales more than 20% in 2014, and many of those firms are doing so only with the aid of acquisitions.

But bottom-line growth prospects remain robust. Roughly 10% of companies in the S&P 500 are expected to boost profits at least 20% in 2014 and again in 2015. 

Yet to twist an old axiom, you pay for what you get. The market’s best profit growers rarely come cheap. 

For example, take this group: Profits are surging, but their price-to-earnings (P/E) ratios are often in the stratosphere.

Source: ThomsonReuters

To be sure, if the U.S. economy can build a head of steam in 2014, then investors will gravitate toward growth stocks and away from defensive stocks, such as high-yielders. Yet for many investors, price still matters. Finding companies poised for solid profit growth and reasonable P/E ratios is always a winning strategy. And select opportunities remain.

First, let’s take a look at the companies in the S&P 500 that are expected to boost earnings per share (EPS) at least 30% in 2014 and again in 2015, while trading for less than 30 times 2014 projected profits.

You might have noticed one of the stars of the dot-com era, JDS Uniphase (Nasdaq: JDSU), on this list. The telecom equipment maker had been staging an impressive comeback, as its shares rose from around $3 in early 2009 to more than $25 in early 2011. But shares now languish near a 52-week low of $12, largely due to disappointing forecasts in late October. Indeed, forward estimates have been falling, though shares now trade for a reasonable 11 times fiscal 2016 profits.

Analysts think JDS Uniphase still has decent growth opportunities as its optical equipment segment is expected to continue to do well, and its telecom equipment testing segment rebounds in 2014 after a current bout of weakness.  

Investors are also expecting a firming in profit margins. Even with the recent soft guidance, Goldman Sachs still expects margins on EBITDA (earnings before interest, taxes, depreciation and amortization) to rise from around 17% in the current fiscal year (that ends next June) to around 20% by fiscal 2015. That explains why JDS Uniphase is still expected to deliver robust profit growth in coming years. And value investors appreciate the $565 million net cash position, which is more than 20% of the company’s market value. 

Pivoting back to the notion of strong growth and reasonable value, let’s take a look at the companies in the S&P 500 that have the lowest P/E ratios and are still expected to boost profits more than 20% in 2014 and 2015. 

These stocks all look reasonably priced in the context of 2014 profits and downright cheap in the context of 2015 profits. Energy services provider Rowan Cos. (NYSE: RDC), for example, is trading for less than seven times projected 2015 profits, while the forward multiple for Devon Energy (NYSE: DVN) is around 8.5.

In this group, you’ll also spot homebuilder Lennar (NYSE: LEN), which I profiled in my look this week at strong top-line growers in the S&P 500.  

The Market Share Dominator
It’s interesting to note the projected profit trajectory for semiconductor equipment maker Applied Materials (Nasdaq: AMAT). I recently took note of how AMAT’s market share strength has a direct impact on profit margins. And it’s the company’s margin profile that explains why analysts expect strong profit growth. Merrill Lynch, for example, sees operating margins rising from 13.7% in fiscal 2013 to around 20% by fiscal 2015.

For investors, the question around chip equipment stocks has always been “Is the industry on the cusp of a cyclical upturn?” Perhaps the better question is “Are business conditions enabling firm pricing?” Judging by AMAT’s expected profit margin trajectory, the answer is clearly affirmative. It’s never easy to assess a clear entry point for these cyclical stocks, but at less than 10 times projected 2015 profits, nobody would consider this market dominator to be expensive. 

Risks to Consider: Much of the projected profit growth for these companies is coming from margin gains.  But margins have already risen to record levels for many firms, so analysts may be overly aggressive in their assumptions of yet higher margins, especially as many companies will need to add to headcount after a long stretch of lean operations.

Action to Take –> These companies are expected to boost profits at a solid clip, even in the face of tepid economic growth. If the economy strengthens substantially, then these firms could deliver even more impressive profit growth. 

P.S. We recently identified more of the market’s most dominant companies in our latest report, “The Top 10 Stocks For 2014.” These 10 stocks have nearly tripled the market’s return, delivering an average 129.5% gain over the past five years. To get more information — including names and ticker symbols — click here.