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How to screen for top-ranked value stocks to buy now.
SMP crushed its industry over the past 15 years, while offering great value and breakout potential.
The S&P 500 and the Nasdaq jumped on Monday on upbeat headlines about the possibility of ending the government shutdown and renewed trade talks between the U.S. and China.
The strong start to the week came as Wall Street kicks off the heart of Q3 earnings season, including reports from Netflix, Tesla, and other potential market-movers.
Even though the market is trading right near all-time highs, investors are far from bullish according to CNN’s Fear and Greed Index, which sits at Fear (29 out of 100).
This backdrop could mean that investors might back away from overheated stocks across the market in favor of value stocks.
Let’s dive into how investors can screen for stocks that offer the winning combination of impressive value and improving earnings outlooks to consider buying in October and throughout the fourth quarter.
Value Stock 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 simple, yet powerful. Here is one of the seven stocks that made it through this week's screen…
Buy Soaring Value Stock SMP Before It Breaks Out
Standard Motor Products, Inc. (SMP - Free Report) is a top manufacturer and distributor of premium automotive parts to both aftermarket and original equipment customers. SMP’s aftermarket products are used in the maintenance, service, and repair of vehicles, and are “largely non-discretionary in nature.”
Meanwhile, its non-aftermarket unit is focused on supplying custom-engineered products for on-highway (commercial and light vehicles) and off-highway (construction and agriculture, and all other) applications.
Image Source: Zacks Investment Research
The automotive equipment company is projected to grow its adjusted earnings per share (EPS) by 19% in 2025 and another 14% next year. SMP’s upward EPS revisions help it earn a Zacks Rank #2 (Buy), and it has crushed our bottom-line estimates by an average of 40% in the trailing four quarters.
On the top line, Standard Motor Products is expected to expand its revenue by 21% in 2025 and another 3% next year.
Image Source: Zacks Investment Research
SMP has climbed 280% in the last 15 years, blowing away its industry’s 67% and its sector’s 160%. The stock has soared 70% in the past six months as it attempts to break out after a longer-term underperformance.
The chart above shows that Standard Motor Products is on the verge of climbing above a key technical range.
Image Source: Zacks Investment Research
Standard Motor Products trades at a 70% discount to its sector despite its historic outperformance, and 40% below its own 15-year highs. SMP also trades at a 25% discount to its 15-year median at 9.7X forward 12-month earnings. On top of that, SMP trades 16% below its average Zacks price target, and all three brokerage recommendations Zacks has are “Strong Buys.”
Get the rest of the stocks on this list and start looking for the newest companies that fit these criteria. It's easy to do. And it could help you find your next big winner. Start screening for these companies today with a free trial to the Research Wizard. You can do it.
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 Now
Key Takeaways
The S&P 500 and the Nasdaq jumped on Monday on upbeat headlines about the possibility of ending the government shutdown and renewed trade talks between the U.S. and China.
The strong start to the week came as Wall Street kicks off the heart of Q3 earnings season, including reports from Netflix, Tesla, and other potential market-movers.
Even though the market is trading right near all-time highs, investors are far from bullish according to CNN’s Fear and Greed Index, which sits at Fear (29 out of 100).
This backdrop could mean that investors might back away from overheated stocks across the market in favor of value stocks.
Let’s dive into how investors can screen for stocks that offer the winning combination of impressive value and improving earnings outlooks to consider buying in October and throughout the fourth quarter.
Value Stock 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 simple, yet powerful. Here is one of the seven stocks that made it through this week's screen…
Buy Soaring Value Stock SMP Before It Breaks Out
Standard Motor Products, Inc. (SMP - Free Report) is a top manufacturer and distributor of premium automotive parts to both aftermarket and original equipment customers. SMP’s aftermarket products are used in the maintenance, service, and repair of vehicles, and are “largely non-discretionary in nature.”
Meanwhile, its non-aftermarket unit is focused on supplying custom-engineered products for on-highway (commercial and light vehicles) and off-highway (construction and agriculture, and all other) applications.
Image Source: Zacks Investment Research
The automotive equipment company is projected to grow its adjusted earnings per share (EPS) by 19% in 2025 and another 14% next year. SMP’s upward EPS revisions help it earn a Zacks Rank #2 (Buy), and it has crushed our bottom-line estimates by an average of 40% in the trailing four quarters.
On the top line, Standard Motor Products is expected to expand its revenue by 21% in 2025 and another 3% next year.
Image Source: Zacks Investment Research
SMP has climbed 280% in the last 15 years, blowing away its industry’s 67% and its sector’s 160%. The stock has soared 70% in the past six months as it attempts to break out after a longer-term underperformance.
The chart above shows that Standard Motor Products is on the verge of climbing above a key technical range.
Image Source: Zacks Investment Research
Standard Motor Products trades at a 70% discount to its sector despite its historic outperformance, and 40% below its own 15-year highs. SMP also trades at a 25% discount to its 15-year median at 9.7X forward 12-month earnings. On top of that, SMP trades 16% below its average Zacks price target, and all three brokerage recommendations Zacks has are “Strong Buys.”
Get the rest of the stocks on this list and start looking for the newest companies that fit these criteria. It's easy to do. And it could help you find your next big winner. Start screening for these companies today with a free trial to the Research Wizard. You can do it.
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: www.zacks.com/performance_disclosure