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The stock rally that began in the U.S. market post elections has remained strong with the market continuing to touch new highs. The Dow Jones Industrial Average recently closed just shy of the 20,000 mark. The index improved almost 8.8% from Nov 8, as of the close of the last trading session.
The stocks have been experiencing this bullish run on the expected pro-growth policies, including prospective tax rate cuts, infrastructure spending and regulatory rollbacks by President-elect Donald Trump. Moreover, the better-than-expected overall earnings in the third-quarter have supported the stock rally.
However, uncertainty over the actual realization of these expected benefits remains after Trump assumes office next year. Moreover, changes in trade agreements will also impact the market significantly. To take advantage of the bull run and benefit even if the rally slows down, we have recommended some fundamentally strong value picks that are expected to perform well.
Rate Hikes in 2017
As expected, the Fed raised interest rates by 25 basis points in the last meeting. This is the first raise this year and the second in almost a decade. While the hike was expected, investors were looking forward to the details regarding the number of hikes in 2017.
The Federal Reserve has given the notion of three hikes next year, which may negatively impact the stock rally. Last year, officials had warned investors of multiple hikes but the year ended with just one. However, for 2017, multiple hikes are more probable as Trump’s policies are likely to be inflationary.
Top Value Picks
While the economy continues its bull run, it is important to find the correct stocks to take advantage of the growing economy. For the current uncertain environment, we have selected value stocks with strong fundamentals to minimize risks and increase potential returns.
A value stock implies investors select stocks that are trading lower than their fair value or intrinsic value and thus offer a significant upside potential. For this stocks with a Value Score of ‘A’ have been selected. The stocks selected are either mid or large cap companies, with a market cap greater than $1 billion, which are considered to be more stable than small cap companies.
Moreover, from the screened stocks we have chosen those with a low price/earnings (“P/E”) as investing in low P/E stocks can prove to be good bargains as the P/E ratio is a snapshot of a firm's earnings strength. A low P/E indicates that either a stock’s price has declined or that its earnings performance has been improving.
In addition to the P/E ratio, we have further narrowed our search to stocks with a low PEG ratio. PEG is the ratio with earnings growth component in it, calculated as the P/E divided by the expected earnings growth rate. A lower PEG ratio is considered better for value investors and if the ratio is below 1 it is considered good (at par or undervalued to its growth rate).
Investors often believe the PEG ratio conveys a more complete story than just the P/E ratio. Additionally, the stocks sport a Zacks Rank #1 (Strong Buy) or #2 (Buy), hinting at a strong upside. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is a holding company of Hawaiian Airlines and has a market cap of $3,213.6 million. The company has a P/E of 11.54 along with a PEG of 0.76. It also sports a Zacks Rank #1.
Tailored Brands, Inc.
Tailored Brands is a specialty retailer of men's suits and provider of tuxedo rental product primarily in the U.S. and Canada. The company with a market cap of $1,372.6 million has P/E of 15.49. Moreover, the company’s PEG stands at 0.89 and it also sports a Zacks Rank #1.
The mining company is involved in the mining of a number of metals has a market cap of $40,711.7 million. The company’s P/E and PEG are currently 9.08 and 0.41, respectively. The company also sports a Zacks Rank #1.
KB Home constructs and sells a variety of new homes designed primarily for first-time, move-up and active adult homebuyers. The company, with a market cap of $1,392.8 million, has a P/E of 9.86. The company’s PEG is 0.35 and it holds a Zacks Rank #2.
Fiat Chrysler Automobiles N.V.
Fiat Chrysler operates as an international automotive company and has a market cap of $11,704.1 million. The company’s P/E and PEG are currently 5.29 and 0.18, respectively. The company also holds a Zacks Rank #2.
Where Do Zacks' Investment Ideas Come From?
You are welcome to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buy" stocks free of charge. There is no better place to start your own stock search. Plus you can access the full list of must-avoid Zacks Rank #5 "Strong Sells" and other private research. See the stocks free >>
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Markets Scale New Highs: 5 Value Picks for 2017
Market Continues to Soar
The stock rally that began in the U.S. market post elections has remained strong with the market continuing to touch new highs. The Dow Jones Industrial Average recently closed just shy of the 20,000 mark. The index improved almost 8.8% from Nov 8, as of the close of the last trading session.
The stocks have been experiencing this bullish run on the expected pro-growth policies, including prospective tax rate cuts, infrastructure spending and regulatory rollbacks by President-elect Donald Trump. Moreover, the better-than-expected overall earnings in the third-quarter have supported the stock rally.
However, uncertainty over the actual realization of these expected benefits remains after Trump assumes office next year. Moreover, changes in trade agreements will also impact the market significantly. To take advantage of the bull run and benefit even if the rally slows down, we have recommended some fundamentally strong value picks that are expected to perform well.
Rate Hikes in 2017
As expected, the Fed raised interest rates by 25 basis points in the last meeting. This is the first raise this year and the second in almost a decade. While the hike was expected, investors were looking forward to the details regarding the number of hikes in 2017.
The Federal Reserve has given the notion of three hikes next year, which may negatively impact the stock rally. Last year, officials had warned investors of multiple hikes but the year ended with just one. However, for 2017, multiple hikes are more probable as Trump’s policies are likely to be inflationary.
Top Value Picks
While the economy continues its bull run, it is important to find the correct stocks to take advantage of the growing economy. For the current uncertain environment, we have selected value stocks with strong fundamentals to minimize risks and increase potential returns.
A value stock implies investors select stocks that are trading lower than their fair value or intrinsic value and thus offer a significant upside potential. For this stocks with a Value Score of ‘A’ have been selected. The stocks selected are either mid or large cap companies, with a market cap greater than $1 billion, which are considered to be more stable than small cap companies.
Moreover, from the screened stocks we have chosen those with a low price/earnings (“P/E”) as investing in low P/E stocks can prove to be good bargains as the P/E ratio is a snapshot of a firm's earnings strength. A low P/E indicates that either a stock’s price has declined or that its earnings performance has been improving.
In addition to the P/E ratio, we have further narrowed our search to stocks with a low PEG ratio. PEG is the ratio with earnings growth component in it, calculated as the P/E divided by the expected earnings growth rate. A lower PEG ratio is considered better for value investors and if the ratio is below 1 it is considered good (at par or undervalued to its growth rate).
Investors often believe the PEG ratio conveys a more complete story than just the P/E ratio. Additionally, the stocks sport a Zacks Rank #1 (Strong Buy) or #2 (Buy), hinting at a strong upside. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hawaiian Holdings, Inc. (HA - Free Report)
The company is a holding company of Hawaiian Airlines and has a market cap of $3,213.6 million. The company has a P/E of 11.54 along with a PEG of 0.76. It also sports a Zacks Rank #1.
Tailored Brands, Inc.
Tailored Brands is a specialty retailer of men's suits and provider of tuxedo rental product primarily in the U.S. and Canada. The company with a market cap of $1,372.6 million has P/E of 15.49. Moreover, the company’s PEG stands at 0.89 and it also sports a Zacks Rank #1.
Vale S.A. (VALE - Free Report)
The mining company is involved in the mining of a number of metals has a market cap of $40,711.7 million. The company’s P/E and PEG are currently 9.08 and 0.41, respectively. The company also sports a Zacks Rank #1.
(Looking for the Best Stocks for 2017? Be among the first to see our Top Ten Stocks for 2017 portfolio here.)
KB Home (KBH - Free Report)
KB Home constructs and sells a variety of new homes designed primarily for first-time, move-up and active adult homebuyers. The company, with a market cap of $1,392.8 million, has a P/E of 9.86. The company’s PEG is 0.35 and it holds a Zacks Rank #2.
Fiat Chrysler Automobiles N.V.
Fiat Chrysler operates as an international automotive company and has a market cap of $11,704.1 million. The company’s P/E and PEG are currently 5.29 and 0.18, respectively. The company also holds a Zacks Rank #2.
Where Do Zacks' Investment Ideas Come From?
You are welcome to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buy" stocks free of charge. There is no better place to start your own stock search. Plus you can access the full list of must-avoid Zacks Rank #5 "Strong Sells" and other private research. See the stocks free >>