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Welcome to Episode #291 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
With the dog days of summer upon us, and stocks still weak for the year, maybe it’s time to look for some classic value stocks.
Are there more classic value stocks in 2022 thanks to the stock market weakness?
How to Screen for Classic Value Stocks
Classic value stocks simply means that the company has value fundamentals in several of the traditional value metrics like low P/E, P/S and PEG ratios.
Zacks has a screen that includes those three ratios plus a P/B ratio under 2.0 and P/Cash Flow under 20.
It also includes the top Zacks Ranks of #1 (Strong Buy) and #2 (Buy), which should hopefully imply that the earnings estimates are on the rise. The screen additionally looks for a Zacks Style Score of A or B, both top scores.
These stocks are therefore going to be very, very cheap.
This is a narrow screen with a lot of components. Historically it has usually returned under 10 stocks but this time, in summer 2022, it produced 20 stocks.
5 Top Classic Value Stocks for Summer 2022
1. CECO Environmental
CECO Environmental is a diversified industrial company whose solutions protect people, the environment and industrial equipment throughout the globe.
In May, CECO Environmental reported a record first quarter with orders up 75%. It also announced a $20 million share repurchase, the largest in company history.
CECO Environmental has a PEG ratio of just 0.9 and a P/B of 1.2 even though shares are up 20% year-to-date.
Bassett Furniture is a small cap furniture manufacturer and retailer. It operates 95 company and licensee-owned stores in the United States and also has over 700 accounts in its wholesale business.
On June 30, it reported earnings and saw revenue up 17% year-over-year. Bassett Furniture has no debt and $89.3 million in cash.
While last quarter was strong, the company did warn that it was likely moving into a period of slowing sales. Yet analysts expect earnings to be up 29.5% this fiscal year.
Bassett Furniture is cheap with a forward P/E of 9.4 even though shares are up 32% year-to-date.
Is it time to jump back into the furniture retailers like Bassett?
BP is a London-based big oil company with a market cap of $90 billion. It’s net debt has fallen 8 quarters in a row through the first quarter of 2022 thanks to rising energy prices and strong free cash flows.
BP’s earnings are expected to rise 106.5% this year to $7.89 from $3.82 last year.
It’s doing a $2.5 billion share buyback this quarter and pays a dividend currently yielding 4.7%.
BP shares are up just 6.7% year-to-date. They’re dirt cheap with a forward P/E of only 3.6 and a PEG ratio of 0.7.
Phillips 66 is an energy company that operates in the Midstream, Chemicals, Refining and Marketing businesses. It owns 12 refineries in the US and Europe as well as over 7,500 service stations in 48 states.
In its first quarter earnings report, Phillips 66 said it was restarting the share repurchase program. It also pays a dividend, currently yielding 4.5%.
Shares are up 21% year-to-date but Phillips 66 is also dirt cheap with a forward P/E of just 5.9.
It reports earnings on July 29, 2022.
Instead of buying an energy producer, should Phillips 66 be on the wish list instead?
WESCO International is a leading global supply chain solutions provider with a market cap of $5.8 billion and 18,000 employees.
In the first quarter, it reported record net sales of $4.9 billion, up 22% year-over-year and raised full-year earnings guidance. WESCO International’s earnings are expected to jump 47.7% this year.
WESCO International shares have actually fallen about 13% year-to-date. It’s cheap with a forward P/E of 7.7.
WESCO International will report second quarter earnings on Aug 4, 2022.
Is WESCO a steal before earnings?
What Else Do You Need to Know About Classic Value Stocks?
Tune into this week’s podcast to find out.
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5 Top Classic Value Stocks for Summer 2022
Description:
Welcome to Episode #291 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
With the dog days of summer upon us, and stocks still weak for the year, maybe it’s time to look for some classic value stocks.
Are there more classic value stocks in 2022 thanks to the stock market weakness?
How to Screen for Classic Value Stocks
Classic value stocks simply means that the company has value fundamentals in several of the traditional value metrics like low P/E, P/S and PEG ratios.
Zacks has a screen that includes those three ratios plus a P/B ratio under 2.0 and P/Cash Flow under 20.
It also includes the top Zacks Ranks of #1 (Strong Buy) and #2 (Buy), which should hopefully imply that the earnings estimates are on the rise. The screen additionally looks for a Zacks Style Score of A or B, both top scores.
These stocks are therefore going to be very, very cheap.
This is a narrow screen with a lot of components. Historically it has usually returned under 10 stocks but this time, in summer 2022, it produced 20 stocks.
5 Top Classic Value Stocks for Summer 2022
1. CECO Environmental
CECO Environmental is a diversified industrial company whose solutions protect people, the environment and industrial equipment throughout the globe.
In May, CECO Environmental reported a record first quarter with orders up 75%. It also announced a $20 million share repurchase, the largest in company history.
CECO Environmental has a PEG ratio of just 0.9 and a P/B of 1.2 even though shares are up 20% year-to-date.
Should CECO Environmental be on your short list?
2. Bassett Furniture Industries (BSET - Free Report)
Bassett Furniture is a small cap furniture manufacturer and retailer. It operates 95 company and licensee-owned stores in the United States and also has over 700 accounts in its wholesale business.
On June 30, it reported earnings and saw revenue up 17% year-over-year. Bassett Furniture has no debt and $89.3 million in cash.
While last quarter was strong, the company did warn that it was likely moving into a period of slowing sales. Yet analysts expect earnings to be up 29.5% this fiscal year.
Bassett Furniture is cheap with a forward P/E of 9.4 even though shares are up 32% year-to-date.
Is it time to jump back into the furniture retailers like Bassett?
3. BP plc (BP - Free Report)
BP is a London-based big oil company with a market cap of $90 billion. It’s net debt has fallen 8 quarters in a row through the first quarter of 2022 thanks to rising energy prices and strong free cash flows.
BP’s earnings are expected to rise 106.5% this year to $7.89 from $3.82 last year.
It’s doing a $2.5 billion share buyback this quarter and pays a dividend currently yielding 4.7%.
BP shares are up just 6.7% year-to-date. They’re dirt cheap with a forward P/E of only 3.6 and a PEG ratio of 0.7.
BP reports earnings on Aug 2, 2022.
Should it be on your short list?
4. Phillips 66 (PSX - Free Report)
Phillips 66 is an energy company that operates in the Midstream, Chemicals, Refining and Marketing businesses. It owns 12 refineries in the US and Europe as well as over 7,500 service stations in 48 states.
In its first quarter earnings report, Phillips 66 said it was restarting the share repurchase program. It also pays a dividend, currently yielding 4.5%.
Shares are up 21% year-to-date but Phillips 66 is also dirt cheap with a forward P/E of just 5.9.
It reports earnings on July 29, 2022.
Instead of buying an energy producer, should Phillips 66 be on the wish list instead?
5. WESCO International (WCC - Free Report)
WESCO International is a leading global supply chain solutions provider with a market cap of $5.8 billion and 18,000 employees.
In the first quarter, it reported record net sales of $4.9 billion, up 22% year-over-year and raised full-year earnings guidance. WESCO International’s earnings are expected to jump 47.7% this year.
WESCO International shares have actually fallen about 13% year-to-date. It’s cheap with a forward P/E of 7.7.
WESCO International will report second quarter earnings on Aug 4, 2022.
Is WESCO a steal before earnings?
What Else Do You Need to Know About Classic Value Stocks?
Tune into this week’s podcast to find out.