When stocks at all-time highs plunge double-digits into correction territory over the course of just five days… it can be hard to find a silver lining.
But once the shock wears off, savvy investors regroup and look for quality names that are on sale and likely to take off once the market gets its act together.
Our Highly-Ranked Undervalued Stocks screen can help you find some of those names. This tool seeks out Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy) stocks with Zacks Value Scores of A or B. It also looks for stocks in spaces that are in the top 50% of the Zacks Industry Rank.
Below are three names that recently passed the test. Make sure to click above to see all the stocks that made the list today.
Macy’s (M - Free Report)
Macy’s (M - Free Report) is doing its best to prove that department stores aren’t a thing of the past. This retail staple may eventually be the ONLY major survivor from this once powerful space, which would be a testament to its resiliency and wherewithal in an unprecedented situation.
The company recently announced a three-year “Polaris Strategy” to help it adapt to the new retail ecosystem. In other words, it wants to stop getting beaten up by Amazon.
The five points of this strategy include strengthening customer relationships, amassing quality fashion, accelerate digital growth, optimize the store portfolio and resetting the cost base.
M has had a rough 2020 so far (who hasn’t?), but the stock does a good job at beating quarterly earnings estimates and has made it all the way to a Zacks Rank #1 (Strong Buy).
The Zacks Consensus Estimate for this fiscal year, ending January 2021, climbed 8.7% over the past two months to $2.49. It’s also seen some improvement in just the past 7 days.
As you might expect at this rough time, the Zacks Consensus Estimate for next fiscal year is only $2.42 right now. However, that quarter doesn’t end until January 2022 and the consensus has soared 26% in two months.
For its fiscal fourth quarter, M reported earnings per share of $2.12 that beat the Zacks Consensus Estimate by 8.7%.
Except for a stiff and uncharacteristic loss in its fiscal second quarter, this company has an excellent record of topping our expectations in good times or bad. As the graph below shows, it has beaten 10 times in the last 11 quarters.
Net sales of around $8.34 billion also topped our expectations.
M is doing what’s necessary to compete in a new and ever-changing retail landscape. It seems like the market and many investors haven’t noticed yet, but that should change in the near future.
PulteGroup (PHM - Free Report)
The homebuilders have been doing just fine despite all these ridiculous swings in the market. And why shouldn’t they? Historically low interest rates were already a boon to the space, and then the Fed goes ahead with a surprise 50bps cut to contend with the coronavirus.
If you’ve been waiting for the ‘right time’ to buy your first house, then this might be it! PulteGroup (PHM - Free Report) is a homebuilding and financial services company that focuses a good part of its business on these first time/entry level buyers.
The stock has soared more than 50% over the past year, which easily outperforms its highly-ranked industry (top 4%).
PHM recently reported its 13th straight positive surprise. Earnings per share of $1.14 in the fourth quarter topped the Zacks Consensus Estimate by 5.6%.
Over the past four quarters, PHM has amassed an average surprise of more than 11%.
Revenue of $3.02 billion also bettered our expectation at $2.97 billion by approximately 1.5%.
PHM’s backlog was up 20.5% from last year, while new home orders jumped 33%.
In other words, the company is looking pretty good moving forward, which was further underscored in its earnings estimates.
Over the past two months, the Zacks Consensus Estimate for this year has gained 6.4% to $4.13. In the same time period, the estimate for next year jumped nearly 10% to $4.52.
For the moment, analysts expect earnings growth of more than 9% for 2021 over 2020.
WW International (WW - Free Report)
Last year started really rough for WW International (WW - Free Report) as the company’s shift in focus from weight loss to general wellness was a bit rocky. But it ended the year with a record 4.2 million subscribers.
Subscriber growth trends improved each quarter in 2019, which led to a “terrific” beginning to 2020 for this company formerly known as Weight Watchers.
The fourth quarter included earnings per share of 42 cents, which beat the Zacks Consensus Estimate by more than 10.5% and brought the four-quarter average surprise to over 17.5%.
In good times or bad, WW is able to beat quarterly earnings estimates. As seen in the chart below, it has outperformed in the past 14 straight quarters.
Revenues of $332.6 million topped our expectations as well and increased 1.5% from last year.
End-of-period subscribers were up 8% and total paid weeks for the quarter advanced 5.7%. WW enjoyed improvements in all major geographic markets.
It has been enjoying solid responses from its global launch of myWW program and the WW Presents: Oprah’s 2020 Vision tour.
For this year, WW expects revenue around $1.6 billion and earnings between $2.15 and $2.40. That would be a nice improvement from revenue of $1.41 billion in 2019 with earnings of $1.72.
Analysts like what they’re seeing and have been raising earnings estimates on WW. Over the past 30 days, the Zacks Consensus Estimate for this year has climbed 8% to $2.27.
Next year’s looking even better with expectations up 15.2% in that time to $2.58. These numbers suggest a nearly 14% growth in 2021 over 2020.
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