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3 Undervalued Zacks Rank #1 Stocks

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Many investors completely freaked out during the correction, but those who are familiar with the Zacks Rank were licking their chops. What was the biggest frustration when the market was soaring? It was that the “easy money” had been made and stocks couldn’t go much higher.

Well, the correction took care of that. The market volatility can also be a help if you know how to play it.

The bottom line is that there are countless quality stocks that were too expensive a month ago...but not now. And once the market finds it’s balance in this strong economy, those stocks will have a long trip to get back to those highs. That long trip can be very profitable for investors.

The Zacks Rank is a great tool to find these stocks before the next leg higher. The Undervalued Zacks #1 Rank Stocks screen will give you a chance to act on these names before the rest of the crowd does. Take a look below at three of the bigger names on the list:

U.S. Steel (X - Free Report)

President Trump shocked the market last week when he outlined plans to impose tariffs of 25% on steel and 10% on aluminum imports. He's taking a lot of heat for this announcement on both Wall Street and Main Street over fears that it could raise prices and start a trade war. But the steel industry just loves the idea.

One of the beneficiaries would be U.S. Steel (X - Free Report) . Shares are up more than 25% so far this year and it has put together three straight quarters of positive earnings surprises. In its fourth quarter release from January, X reported earnings per share of 76 cents, beating the Zacks Consensus Estimate of 68 cents by 11.8%. Revenue popped 18.2% year over year to $3.13 billion, compared to the Zacks Consensus of about $3.07 billion.

For the full year, adjusted earnings per share of $1.94 marked a dramatic turnaround from last year’s loss of $1.60. Plus, net sales jumped more than 19% to $12.25 billion.

The Zacks Consensus Estimate for this year is now at $3.73 per share, which has improved by nearly 42% over the past 60 days and about 13.7% in just the past 30. Expectations for next year are even more impressive. At the moment, we expect earnings for 2019 to climb 13.7% year over year to $4.24. The result improved by 93% in the past 60 days, including a rise of 13% in just the past month.


Macy’s (M - Free Report)

Earnings estimates for Macy’s (M - Free Report) really took off after the department store giant reported encouraging fiscal fourth quarter results last week. In just the past seven trading days, analysts have boosted this fiscal year’s expectation by nearly 25%, while next fiscal year has soared more than 70% in that time.

M now expects earnings per share between $3.55 and $3.75 for fiscal 2018 (ending January 2019). The Zacks Consensus Estimate at the time was only around $2.90, so there was a lot of room for higher revisions after the report. In addition to robust consumer sentiment, the company made several moves to get itself in a good position to find success in the ever-changing retail space.

The company has now topped our estimates for three straight quarters. Most recently, it reported earnings per share of $2.82 in its fiscal fourth quarter. The result was more than 4.8% better than the Zacks Consensus Estimate. Total revenues of $8.67 billion improved 1.8% from last year. Same -store sales were up 1.3%. M has now put together 34 straight quarters of double-digit growth in its digital business.

The Zacks Consensus Estimate for the current year is $3.63 per share. Earnings estimates had been rising even before the recent report. In fact, that outlook jumped 45.2% in 3 months. Analysts are only expecting $3.17 for next fiscal year, but that doesn’t end until January 2020. There’s a lot of time for improvement if M’s optimism eventually pays off. Plus, the outlook improved by an astounding 120% in the past 3 months.

So far, M has gained nearly 21% year to date, and is part of a space in the top 1% of the Zacks Industry Rank.

Macy's Inc Price, Consensus and EPS Surprise

Macy's Inc Price, Consensus and EPS Surprise | Macy's Inc Quote


US Foods Holding Corp. (USFD - Free Report)

US Foods Holding Corp. (USFD - Free Report) is one of the country’s largest foodservice distributors, partnering with about 250,000 restaurants and foodservice operators. However, it has only been a publicly-traded company for less than two years.

Since its IPO, US Foods beat 6 times and matched once; it has never missed. It reported fourth quarter earnings of 44 cents per share in mid-February, which was 2.3% better than the Zacks Consensus Estimate at 43 cents. Net sales advanced 5.6% year over year to $6 billion. Total case volume increased 1.9% while independent restaurant case volume was up 7.1%.

US Foods sees adjusted diluted earnings per share of between $2 and $2.10 for the full year with net sales growth of 3% to 4%. It expects total case volume growth of 1% to 2%.

The full year saw net sales of $24.1 billion, or 5.4% better than last year. Total case volume increased 2.9% in 2017, while independent restaurant case volume was up 5.2%. These increases were credited to strong growth with independent restaurant, healthcare and hospitality customers.

Earnings estimates for this year and next have jumped since USFD’s quarterly report. The Zacks Consensus Estimate for 2018 is now at $2.05 per share, which has gained nearly 21% in the past two months and 13.3% in the past 30 days. Analysts currently expect earnings to then climb 14.1% further to $2.34 per share in 2019. The guidance has improved nearly 24% in two months and 14.7% in 30 days.

US Foods Holding Corp. Price, Consensus and EPS Surprise

US Foods Holding Corp. Price, Consensus and EPS Surprise | US Foods Holding Corp. Quote


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United States Steel Corporation (X) - free report >>

US Foods Holding Corp. (USFD) - free report >>

Macy's, Inc. (M) - free report >>

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