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Finding the Best Value Stocks to Buy to Start 2024
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The Nasdaq tumbled through early afternoon trading on Tuesday following the New Year’s Day holiday. Big moves lower from Apple and other big tech names drove the downbeat start to 2024 trading as investors take some profits following the fierce early December rally.
The selling on Tuesday and the relatively sideways movement in the back half of last month showcase that investors are acting rationally since stocks cannot go straight up. Stocks and indexes always slide down to key moving averages before they can return on their upward journey.
Thankfully, the dips might be bought up quickly as more investors big and small chase returns in 2024 as rates fall. No matter what, many investors likely want to find strong value this year following the tech-heavy 2023 rebound.
Today we show investors how to screen for stocks that offer a great combination of enticing valuation levels and improving earnings outlooks to consider buying to kick off 2024.
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 in this list)
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…
NRG Energy is a utilities powerhouse that generates electricity and provides energy solutions and natural gas to millions of business and residential customers. The Houston, Texas-based company is rolling out more digital-focused efforts as electric grids, homes, and businesses grow more high-tech.
These tech-focused efforts include NRG’s acquisition of Vivint Smart Home in March 2023. The beefed-up and diversified NRG boasts a network of approximately 7.3 million customers.
Image Source: Zacks Investment Research
NRG can bundle offerings for utilities, home security, automation, and more to thrive in a smart home/building world. The completion of the deal did, however, help spur an activist investor to push to force NRG to focus on returning more value to shareholders.
NRG on November 20 said that it was replacing its CEO and shaking up the board. NRG also announced a new $950 million accelerated share repurchase deal in November.
NRG’s adjusted earnings are projected to climb by 93% in FY23 and 18% higher next year. Plus, its earnings outlook has improved significantly recently, with its most accurate/most recent EPS estimates coming in solidly above consensus to help it land a Zacks Rank #1 (Strong Buy). Its dividend yields 2.9% at the moment vs. the Utilities sector’s 3.5%.
Image Source: Zacks Investment Research
NRG shares have soared 60% over the last 12 months to trade right near fresh all-time highs and blow away the Utilities sector’s -7% dip. NRG has also climbed by 80% in the past decade vs. its sector’s 11% run.
Utilities appear poised for a comeback after a rough stretch, with the sector up 12% during the past three months. Despite its outperformance and its recent surge to new highs, NRG trades at a 27% discount to the Utilities sector and right near its 10-year median at 10.2X forward 12-month earnings.
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
Finding the Best Value Stocks to Buy to Start 2024
The Nasdaq tumbled through early afternoon trading on Tuesday following the New Year’s Day holiday. Big moves lower from Apple and other big tech names drove the downbeat start to 2024 trading as investors take some profits following the fierce early December rally.
The selling on Tuesday and the relatively sideways movement in the back half of last month showcase that investors are acting rationally since stocks cannot go straight up. Stocks and indexes always slide down to key moving averages before they can return on their upward journey.
Thankfully, the dips might be bought up quickly as more investors big and small chase returns in 2024 as rates fall. No matter what, many investors likely want to find strong value this year following the tech-heavy 2023 rebound.
Today we show investors how to screen for stocks that offer a great combination of enticing valuation levels and improving earnings outlooks to consider buying to kick off 2024.
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 in this list)
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…
NRG Energy, Inc. ((NRG - Free Report) )
NRG Energy is a utilities powerhouse that generates electricity and provides energy solutions and natural gas to millions of business and residential customers. The Houston, Texas-based company is rolling out more digital-focused efforts as electric grids, homes, and businesses grow more high-tech.
These tech-focused efforts include NRG’s acquisition of Vivint Smart Home in March 2023. The beefed-up and diversified NRG boasts a network of approximately 7.3 million customers.
Image Source: Zacks Investment Research
NRG can bundle offerings for utilities, home security, automation, and more to thrive in a smart home/building world. The completion of the deal did, however, help spur an activist investor to push to force NRG to focus on returning more value to shareholders.
NRG on November 20 said that it was replacing its CEO and shaking up the board. NRG also announced a new $950 million accelerated share repurchase deal in November.
NRG’s adjusted earnings are projected to climb by 93% in FY23 and 18% higher next year. Plus, its earnings outlook has improved significantly recently, with its most accurate/most recent EPS estimates coming in solidly above consensus to help it land a Zacks Rank #1 (Strong Buy). Its dividend yields 2.9% at the moment vs. the Utilities sector’s 3.5%.
Image Source: Zacks Investment Research
NRG shares have soared 60% over the last 12 months to trade right near fresh all-time highs and blow away the Utilities sector’s -7% dip. NRG has also climbed by 80% in the past decade vs. its sector’s 11% run.
Utilities appear poised for a comeback after a rough stretch, with the sector up 12% during the past three months. Despite its outperformance and its recent surge to new highs, NRG trades at a 27% discount to the Utilities sector and right near its 10-year median at 10.2X forward 12-month earnings.
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/