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5 Incredible Value Stocks in Today's Elevated Market
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Investors hit the panic button as soon as the U.K. cast 51.8% votes in favor of exiting the European Union (EU). The news resulted in a bloodbath in the stock market with major indices like the Dow Jones Industrial Average and S&P 500 declining 4.8% and 5.3%, respectively, in just two trading sessions.
However, it seems that investors have downplayed Brexit-related fears as reflected in the recent stock market rally, with the benchmark Dow Jones Industrial Average and S&P 500 gaining 6.2% and 6.6%, respectively, since Jun 28. On Friday, the S&P 500 closed at a record high of 2129.90, sparked by the robust June jobs report.
Moreover, the recent job data has painted a rosy picture of the labor market, dispelling fears over the health of the U.S. economy. Positive economic data showing a rapid improvement in the U.S. manufacturing activity in June on the back of new orders and increased output and exports also lifted spirits.
Why Value Investing?
Investor sentiment is often swayed by breaking news and headlines, keeping the stock market in its thrall. However, a prudent analysis, based on the intrinsic value of the stock will help investors to maximize their portfolio’s return.
Value investing simply means buying the shares of companies with low stock valuations compared with similar companies or the market as a whole. In other words, it means investing in stocks whose market value is less than their “fundamental value” or “intrinsic value” based upon an individual’s investment horizon.
Value investing has always been a very popular strategy, and for good reason. After all, who doesn’t want to find stocks that have low valuation ratios (P/E, P/S, P/B), a solid outlook, and attractive dividends? However, identifying an undervalued stock is not an easy task. In fact, it is even more difficult to zero in on one that offers great value but is trading cheap at the moment. An investor needs to use the right tools and metrics to select such stocks which are currently trading below their true value or potential value, and to invest in those stocks before they’re discovered by the market.
Our Choices
It might be difficult for one to look at each parameter and compare with the peer group for an analysis on whether the stock is attractive from the value perspective. To make the task easy, Zacks has designed the new Style Score System.
The attractiveness of a stock as an investment option is confirmed by its Value Style Score of “A” (or “B”). The Value Style Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount. Our research shows that stocks with Style Scores of “A” or “B” when combined with a Zacks Rank #1 (Strong Buy) or #2 (Buy) offer the best upside potential.
We have narrowed down our search to the following stocks based on a solid Zacks Rank #1 and Value Style Score of “A”.
Dean Foods Company , a leading processor and distributor of milk and other dairy products in the U.S. as well as a top manufacturer of various specialty food products currently sports a Zacks Rank #1 and Value Style Score of “A”. It has a P/E of 12.29%, compared to the industry P/E of 35.77%. The company’s long-term growth rate stands at 12%. It has surpassed the Zacks Consensus Estimate in the trailing four quarters with an average earnings surprise of 17.8%.
Herbalife Ltd. (HLF - Free Report) , a global network marketing company offering a range of science-based weight management products, nutritional supplements and personal care products, is likely to emerge as a winner in the long run. The company not only sports a Zacks Rank #1, but also has a Value Score of “A”. Its P/E stands at 12.82% in comparison to the industry P/E of 17.29%. The company’s earnings have outpaced the Zacks Consensus Estimate in all of the past four quarters with an average beat of 21.5%.
Bunge Limited (BG - Free Report) , which operates as an agribusiness as well as food company internationally, has a Zacks Rank #1 and Value Score of “A”. It has a P/E of 11.32%, compared to the industry P/E of 20.35%. The company’s long-term growth rate stands at 9.2%.
NGL Energy Partners LP (NGL - Free Report) is involved in businesses like crude oil logistics, water solutions, distributing natural gas liquids to retailers, along with selling propane and distillates to end users. The stock not only flaunts a Zacks Rank #1 but also has a Value Score of “A”. The company’s P/B stands at 1.14% in comparison to the industry P/E of 1.49%.
Trinseo SA (TSE - Free Report) , which manufactures and markets synthetic rubber, latex, and plastic products currently has a Zacks Rank #1 and Value Score of “A”. It has a P/E of 7.39%, compared to the industry P/E of 11.97%. The company has surpassed the Zacks Consensus Estimate in three of the trailing four quarters with an average earnings surprise of 2.2%.
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5 Incredible Value Stocks in Today's Elevated Market
Investors hit the panic button as soon as the U.K. cast 51.8% votes in favor of exiting the European Union (EU). The news resulted in a bloodbath in the stock market with major indices like the Dow Jones Industrial Average and S&P 500 declining 4.8% and 5.3%, respectively, in just two trading sessions.
However, it seems that investors have downplayed Brexit-related fears as reflected in the recent stock market rally, with the benchmark Dow Jones Industrial Average and S&P 500 gaining 6.2% and 6.6%, respectively, since Jun 28. On Friday, the S&P 500 closed at a record high of 2129.90, sparked by the robust June jobs report.
Moreover, the recent job data has painted a rosy picture of the labor market, dispelling fears over the health of the U.S. economy. Positive economic data showing a rapid improvement in the U.S. manufacturing activity in June on the back of new orders and increased output and exports also lifted spirits.
Why Value Investing?
Investor sentiment is often swayed by breaking news and headlines, keeping the stock market in its thrall. However, a prudent analysis, based on the intrinsic value of the stock will help investors to maximize their portfolio’s return.
Value investing simply means buying the shares of companies with low stock valuations compared with similar companies or the market as a whole. In other words, it means investing in stocks whose market value is less than their “fundamental value” or “intrinsic value” based upon an individual’s investment horizon.
Value investing has always been a very popular strategy, and for good reason. After all, who doesn’t want to find stocks that have low valuation ratios (P/E, P/S, P/B), a solid outlook, and attractive dividends? However, identifying an undervalued stock is not an easy task. In fact, it is even more difficult to zero in on one that offers great value but is trading cheap at the moment. An investor needs to use the right tools and metrics to select such stocks which are currently trading below their true value or potential value, and to invest in those stocks before they’re discovered by the market.
Our Choices
It might be difficult for one to look at each parameter and compare with the peer group for an analysis on whether the stock is attractive from the value perspective. To make the task easy, Zacks has designed the new Style Score System.
The attractiveness of a stock as an investment option is confirmed by its Value Style Score of “A” (or “B”). The Value Style Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount. Our research shows that stocks with Style Scores of “A” or “B” when combined with a Zacks Rank #1 (Strong Buy) or #2 (Buy) offer the best upside potential.
We have narrowed down our search to the following stocks based on a solid Zacks Rank #1 and Value Style Score of “A”.
Dean Foods Company , a leading processor and distributor of milk and other dairy products in the U.S. as well as a top manufacturer of various specialty food products currently sports a Zacks Rank #1 and Value Style Score of “A”. It has a P/E of 12.29%, compared to the industry P/E of 35.77%. The company’s long-term growth rate stands at 12%. It has surpassed the Zacks Consensus Estimate in the trailing four quarters with an average earnings surprise of 17.8%.
Herbalife Ltd. (HLF - Free Report) , a global network marketing company offering a range of science-based weight management products, nutritional supplements and personal care products, is likely to emerge as a winner in the long run. The company not only sports a Zacks Rank #1, but also has a Value Score of “A”. Its P/E stands at 12.82% in comparison to the industry P/E of 17.29%. The company’s earnings have outpaced the Zacks Consensus Estimate in all of the past four quarters with an average beat of 21.5%.
Bunge Limited (BG - Free Report) , which operates as an agribusiness as well as food company internationally, has a Zacks Rank #1 and Value Score of “A”. It has a P/E of 11.32%, compared to the industry P/E of 20.35%. The company’s long-term growth rate stands at 9.2%.
NGL Energy Partners LP (NGL - Free Report) is involved in businesses like crude oil logistics, water solutions, distributing natural gas liquids to retailers, along with selling propane and distillates to end users. The stock not only flaunts a Zacks Rank #1 but also has a Value Score of “A”. The company’s P/B stands at 1.14% in comparison to the industry P/E of 1.49%.
Trinseo SA (TSE - Free Report) , which manufactures and markets synthetic rubber, latex, and plastic products currently has a Zacks Rank #1 and Value Score of “A”. It has a P/E of 7.39%, compared to the industry P/E of 11.97%. The company has surpassed the Zacks Consensus Estimate in three of the trailing four quarters with an average earnings surprise of 2.2%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>