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The selling heated up again on Tuesday in the early part of a busy week full of economic data, including updates on consumer confidence, the housing market, Q2 GDP, consumer spending, and the Fed’s preferred inflation gauge (PCE).
The S&P 500 and the Nasdaq both fell over 1% through early afternoon trading. Their current downturn could see both key indexes test their 200-day moving averages in the coming days. Thankfully, both the benchmark and the tech-heavy index are tumbling to oversold RSI levels.
For instance, the S&P 500 is approaching its most oversold levels since it bottomed back at the end of the third quarter of 2022, with it on the cusp of giving up a summer’s worth of gains.
Image Source: Zacks Investment Research
Despite the selling in a traditionally bad month for stocks, the market backdrop appears to remain bullish. First off, the Fed is still likely near the end of its tightening cycle even if it is forced to raise rates a bit higher and keep them there a bit longer. Plus, the outlook for S&P 500 earnings growth in 2024 and 2025 is impressive and hardly signals an upcoming recession.
Therefore, investors who want to stay exposed to the market and buy stocks heading into October might want to look for stocks that offer a compelling combination of strong value and improving earnings outlooks.
Screen Basics
The screen we are digging into today comes loaded with the Research Wizard and aims to sort through highly-ranked Zacks stocks to find some of the top value names.
This value-focused screen searches only for stocks that boast Zacks Rank #1 (Strong Buys) or #2 (Buys). It also focuses on stocks with price-to-earnings (P/E) ratios under the median for its industry. The screen also looks for stocks with price-to-sales (P/S) ratios under the median for its industry to help lock in relative value compared to its peers, since basing it off the wider market is not always the most useful tool.
The screen then digs into quarterly earnings rates above the median for its industry. This particular Zacks screen also uses a special blend of upgrades and estimates revisions to select the best seven stocks in this list.
The screen basics are listed below…
· Only Zacks Rank #1 (Strong Buy) or #2 (Buy) Stocks
· P/E (using 12-month EPS) - Under the Median for its Industry
· P/S - Under the Median for its Industry
· Percentage Change Act. EPS Q(0)/Q(-1)
· Rating Change and Revisions Factors (to help narrow the list to the 7 best stocks)
This strategy comes loaded with the Research Wizard and it is called bt_sow_value_method1. It can be found in the SoW (Screen of the Week) folder.
The screen is pretty simple, yet powerful. Here is one of the seven stocks that made it through this week's screen…
Pampa Energía is one of the largest fully integrated electricity companies in Argentina. Through its subsidiaries, Pampa Energía engages in the generation, transmission and distribution of electricity in Argentina.
Image Source: Zacks Investment Research
PAM shares have crushed the Zacks Utilities sector over the last decade, up 680% vs. 10%, which also blows away the S&P 500’s 165% run. Pampa Energía’s performance during this stretch includes a large downturn from its 2018 highs.
PAM stock has skyrocketed 275% over the last three years and 25% over the last six months. Pampa Energía currently trades 7% below its average Zacks price target and between its 50-day and 200-day moving averages.
Image Source: Zacks Investment Research
Despite its huge outperformance, Pampa Energía trades at a roughly 70% discount to the Utilities sector at 4.4X forward 12-month earnings. Pampa Energía’s revenue is projected to climb slightly both this year and next. Meanwhile, its adjusted earnings are expected to come in roughly flat this year and then jump 11% higher next year.
Want more articles from this author? Scroll up to the top of this article and click the FOLLOW AUTHOR button to get an email each time a new article is published.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Image: Bigstock
How to Find Great Value Stocks to Buy in October
The selling heated up again on Tuesday in the early part of a busy week full of economic data, including updates on consumer confidence, the housing market, Q2 GDP, consumer spending, and the Fed’s preferred inflation gauge (PCE).
The S&P 500 and the Nasdaq both fell over 1% through early afternoon trading. Their current downturn could see both key indexes test their 200-day moving averages in the coming days. Thankfully, both the benchmark and the tech-heavy index are tumbling to oversold RSI levels.
For instance, the S&P 500 is approaching its most oversold levels since it bottomed back at the end of the third quarter of 2022, with it on the cusp of giving up a summer’s worth of gains.
Image Source: Zacks Investment Research
Despite the selling in a traditionally bad month for stocks, the market backdrop appears to remain bullish. First off, the Fed is still likely near the end of its tightening cycle even if it is forced to raise rates a bit higher and keep them there a bit longer. Plus, the outlook for S&P 500 earnings growth in 2024 and 2025 is impressive and hardly signals an upcoming recession.
Therefore, investors who want to stay exposed to the market and buy stocks heading into October might want to look for stocks that offer a compelling combination of strong value and improving earnings outlooks.
Screen Basics
The screen we are digging into today comes loaded with the Research Wizard and aims to sort through highly-ranked Zacks stocks to find some of the top value names.
This value-focused screen searches only for stocks that boast Zacks Rank #1 (Strong Buys) or #2 (Buys). It also focuses on stocks with price-to-earnings (P/E) ratios under the median for its industry. The screen also looks for stocks with price-to-sales (P/S) ratios under the median for its industry to help lock in relative value compared to its peers, since basing it off the wider market is not always the most useful tool.
The screen then digs into quarterly earnings rates above the median for its industry. This particular Zacks screen also uses a special blend of upgrades and estimates revisions to select the best seven stocks in this list.
The screen basics are listed below…
· Only Zacks Rank #1 (Strong Buy) or #2 (Buy) Stocks
· P/E (using 12-month EPS) - Under the Median for its Industry
· P/S - Under the Median for its Industry
· Percentage Change Act. EPS Q(0)/Q(-1)
· Rating Change and Revisions Factors (to help narrow the list to the 7 best stocks)
This strategy comes loaded with the Research Wizard and it is called bt_sow_value_method1. It can be found in the SoW (Screen of the Week) folder.
The screen is pretty simple, yet powerful. Here is one of the seven stocks that made it through this week's screen…
Pampa Energía ((PAM - Free Report) )
Pampa Energía is one of the largest fully integrated electricity companies in Argentina. Through its subsidiaries, Pampa Energía engages in the generation, transmission and distribution of electricity in Argentina.
Image Source: Zacks Investment Research
PAM shares have crushed the Zacks Utilities sector over the last decade, up 680% vs. 10%, which also blows away the S&P 500’s 165% run. Pampa Energía’s performance during this stretch includes a large downturn from its 2018 highs.
PAM stock has skyrocketed 275% over the last three years and 25% over the last six months. Pampa Energía currently trades 7% below its average Zacks price target and between its 50-day and 200-day moving averages.
Image Source: Zacks Investment Research
Despite its huge outperformance, Pampa Energía trades at a roughly 70% discount to the Utilities sector at 4.4X forward 12-month earnings. Pampa Energía’s revenue is projected to climb slightly both this year and next. Meanwhile, its adjusted earnings are expected to come in roughly flat this year and then jump 11% higher next year.
Click here to sign up for a free trial to the Research Wizard today.
Want more articles from this author? Scroll up to the top of this article and click the FOLLOW AUTHOR button to get an email each time a new article is published.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance/.