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2 Highly-Ranked Stocks to Buy for Value, Growth, & Momentum

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Stocks have started to gain some nice momentum over the last few trading sessions as we head into earnings season.

Here are two stocks that are more likely to see continued rallies over the next few weeks sporting a Zacks Rank #1 (Strong Buy) and an overall “A” VGM Style Scores grade for value, growth, and momentum.

Penske Automotive Group (PAG - Free Report)  

Penske Automotive Group is starting to stick out as a leading operator of automotive and commercial truck dealerships in the U.S., Canada, and Western Europe.

Penske stock has an “A” Style Scores grade for Value which largely attributes to its overall “A” VGM grade. At $115 a share, Penske stock trades at just 7.6X forward earnings and slightly above the industry average of 6.1X. However, this is 56% below its decade high of 17.3X and a 25% discount to the median of 10.2X. PAG stock also trades 56% beneath the S&P 500’s 17.3X.

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Plus, Penske has been a leader in its space. Over the last two years, PAG’s total return including dividends is +93% to crush the S&P 500’s +4% and the Retail-Wholesale Auto/Truck Markets’ +18%.

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Image Source: Zacks Investment Research

The company’s momentum over the last few years has been attributed to its solid growth, especially on the bottom line. This could continue with earnings estimate revisions trending higher.

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Image Source: Zacks Investment Research

Fiscal 2022 earnings are now expected to climb 20% at $18.36 per share compared to estimates of $18.02 a share 90 days ago. Fiscal 2023 earnings are projected to decline -16% after an impressive year to $15.33 a share but this is also up from estimates of $14.90 per share last quarter.

Penske’s 1.94% dividend yield is also a great addition to investors’ portfolios and PAG’s dividend yield is much higher than the industry average of 0.82% and tops the S&P 500’s 1.6%.

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Reinsurance Group of America (RGA - Free Report)

Another stock sticking out for value, growth, and momentum is Reinsurance Group of America. RGA is a leading global provider of traditional life and health reinsurance.

RGA has operations in the U.S., Latin America, Canada, Europe, the Middle East, Africa, Asia, and Australia. With such a large global footprint RGA stock appears to be undervalued considering the resurgence of its growth and expansion.

Earnings have stabilized and rebounded after higher insurance claims throughout the pandemic from early deaths due to Covid-19 affected the company’s bottom line. As we move further away from the pandemic, and vaccines along with treatments continue to lower Covid-19 fatalities RGA earnings have recovered.

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RGA’s earnings are now expected to soar 1,234% for its current fiscal 2022 at $15.08 per share compared to EPS of $1.13 a share in FY21. Fiscal 2023 earnings are projected to rise another 3% to $15.55 a share. Earnings estimates are largely up for FY22 over the last 90 days and have remained the same for FY23.

As you can imagine, the resurgence in RGA’s bottom line has led to the stock spiking while the broader market and economy have declined. RGA’s total return over the last two years is now +33% to beat the S&P 500’s +4% and the Insurance-Life Markets’ +1%.

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Trading at $144 per share and near its highs, RGA stock still trades at just 9.3X forward earnings. This is slightly above the industry average of 8.6X but RGA is largely outperforming its peers. Even better, RGA trades 68% below its decade high of 29.1X and at an 18% discount to the median of 11.4X. RGA shares also trade 46% beneath the benchmark’s 17.3X.

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Better still, RGA’s 2.2% dividend yield is much higher than the industry average of 0.02% and also tops the S&P 500’s 1.6%.

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Image Source: Zacks Investment Research

Bottom Line

Penske Automotive Group (PAG - Free Report) and Reinsurance Group of America (RGA - Free Report) continue to look like strong investments to begin 2023. With solid growth in their bottom lines, the valuation of both stocks indicates that more upside is plausible and generous dividends also support investors.


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Penske Automotive Group, Inc. (PAG) - free report >>

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