- (1:45) - Value Investor Basic's
- (9:30) - Screening For Stocks With Good P/E Ratios
- (16:50) - Stock Screener And Tracey’s Top Stock Picks
- (27:20) - Episode Roundup: AAPL, TSCO, ABG, AMWD, DHI, KR, FBC
- Podcast@Zacks.com
Welcome to Episode #199 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 so many new investors, many are confused about what value investing is.
What is it?
And how do you find good value stocks?
The Definition of Value Investing
Value investing is buying cheap stocks. But “cheap” doesn’t mean share price.
Cheapness is usually determined by the price-to-earnings ratio (P/E). That is price divided by earnings. The lower it is, the cheaper the company.
Value stocks are also usually in an industry that Wall Street is ignoring. In 2020, think of the banks. They are all mostly cheap as Wall Street is avoiding them.
Screening for Value Stocks
Investors can use the P/E ratio to find cheap stocks, but if you only screen with that one metric, you will get over 1,000 stocks.
That’s where the Zacks Rank comes in handy. The Zacks Rank can narrow down the list of cheap stocks.
Screening for Zacks Rank #1 (Strong Buy) stocks, which is the highest of the Zacks Ranks, and a P/E ratio under 15, really narrowed down the list of stocks.
That screen gave just 77 stocks.
5 Value Stocks with Zacks Ranks of #1
1. Asbury Automotive Group (ABG - Free Report) has a forward P/E of just 10.6. It recently reported record second quarter results as operating margin was a record 5.7%.
2. American Woodmark (AMWD - Free Report) has seen its earnings estimates revised higher over the past 30 days. The cabinet maker is cheap, with a forward P/E of 12.8.
3. DR Horton (DHI - Free Report) just posted a hot second quarter as consumers are out in droves buying new homes. Even as the shares have surged, they are still attractive with a forward P/E of 13.2.
4. Kroger (KR - Free Report) is part of the cocoon at home companies. Many consumers are still reluctant to eat outside the home. The shares are still trading with a cheap valuation, with a forward P/E of 12.4.
5. Flagstar Bancorp is a community bank in Michigan which also operates a national mortgage lending business. With record low mortgage rates, home buying has been hot despite the pandemic. In the second quarter, Flagstar reported its best quarter in the company’s history. Yet these shares are still dirt cheap with a forward P/E of 8.1.
What else do you need to know about how to value invest?
Find out this week’s podcast.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Welcome to Episode #199 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 so many new investors, many are confused about what value investing is.
What is it?
And how do you find good value stocks?
The Definition of Value Investing
Value investing is buying cheap stocks. But “cheap” doesn’t mean share price.
Cheapness is usually determined by the price-to-earnings ratio (P/E). That is price divided by earnings. The lower it is, the cheaper the company.
Value stocks are also usually in an industry that Wall Street is ignoring. In 2020, think of the banks. They are all mostly cheap as Wall Street is avoiding them.
Screening for Value Stocks
Investors can use the P/E ratio to find cheap stocks, but if you only screen with that one metric, you will get over 1,000 stocks.
That’s where the Zacks Rank comes in handy. The Zacks Rank can narrow down the list of cheap stocks.
Screening for Zacks Rank #1 (Strong Buy) stocks, which is the highest of the Zacks Ranks, and a P/E ratio under 15, really narrowed down the list of stocks.
That screen gave just 77 stocks.
5 Value Stocks with Zacks Ranks of #1
1. Asbury Automotive Group (ABG - Free Report) has a forward P/E of just 10.6. It recently reported record second quarter results as operating margin was a record 5.7%.
2. American Woodmark (AMWD - Free Report) has seen its earnings estimates revised higher over the past 30 days. The cabinet maker is cheap, with a forward P/E of 12.8.
3. DR Horton (DHI - Free Report) just posted a hot second quarter as consumers are out in droves buying new homes. Even as the shares have surged, they are still attractive with a forward P/E of 13.2.
4. Kroger (KR - Free Report) is part of the cocoon at home companies. Many consumers are still reluctant to eat outside the home. The shares are still trading with a cheap valuation, with a forward P/E of 12.4.
5. Flagstar Bancorp is a community bank in Michigan which also operates a national mortgage lending business. With record low mortgage rates, home buying has been hot despite the pandemic. In the second quarter, Flagstar reported its best quarter in the company’s history. Yet these shares are still dirt cheap with a forward P/E of 8.1.
What else do you need to know about how to value invest?
Find out this week’s podcast.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Get the latest research report on KR - FREE
Get the latest research report on DHI - FREE
Get the latest research report on AMWD - FREE
Get the latest research report on ABG - FREE