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5 Top-Ranked Value Stocks With Double-Digit Returns in July
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Wall Street has been reeling under volatility since mid-June, following the second wave of coronavirus in as many as 24 U.S. states. New cases of COVID-19 jumped as all 50 states started reopening after nearly two months of lockdowns. The resurgence of the deadly virus has raised several questions on the much-hyped V-shaped recovery of the U.S. economy.
Nevertheless, after rallying for three months in a row, Wall Street has been able to maintain its northward journey in July so far. All three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — are in positive territory month to date.
However, resurgence of the pandemic, unavailability of vaccine, intensification of U.S.-China tensions and a delay in the second round of fiscal stimulus by the government led to regular market fluctuations. At this juncture, it makes good sense to buy value stocks that popped in July and still have solid upside.
Resurgence of Coronavirus
All 50 states of the United States have opened their economies in some form since the last week of May after two months of lockdowns. However, within a month's time most of the states have been forced to reclose as new cases of coronavirus jumped in as many as 24 states.
Meanwhile, Conference Board reported that U.S. consumer confidence dropped to 92.6 from the upwardly revised data of 98.3 in June. The consensus estimate was 96. Notably, the expectations subindex — defining consumer's expectation for the next six months — dropped to a four-month low of 91.5 in July from 106.1 in June.
U.S.- China Tensions Heighten
The lingering economic and geo-political conflicts between the United States and China have intensified recently. On Jul 22, the U.S. government instructed China to close its consulate in Houston, citing that it was used for spying purposes. China retaliated asking the United States to close its consulate in Chengdu.
The U.S. government has already imposed trade sanctions on 11 major Chinese companies on account of violating human rights in China. On Jul 21, the Department of Justice indicted two Chinese hackers of stealing trade secrets and trying to steal research on potential drugs for coronavirus treatment.
Delay in Stimulus, Lack of Vaccine
Negotiations between Senate Republicans and Democrats regarding a second round of fiscal stimulus are yet to reach any conclusion. Democrats are eager to maintain the existing $600 weekly unemployment benefit. This stimulus will come to an end by this month end. However, Republicans want to reduce it to a $200 add-on through September.
Moreover, no vaccine or a proper line of treatment is available yet to curb the spread of coronavirus. Although, several healthcare firms have made commendable improvement in clinical trials, it is still not clear whether a vaccine will be available in near future or not.
Our Top Picks
At this stage, investors should be prepared to minimize fluctuations in their portfolio and consequently rebalance it with suitable financial assets to maintain stability. Thus, it would be prudent to pick up value stocks with a favorable Zacks Rank that popped in July and still have momentum.
The chart below shows the price performance of our five picks in past month.
Meritage Homes Corp. (MTH - Free Report) designs and builds single-family homes in the United States. It operates through two segments, Homebuilding and Financial Services. The forward P/E ratio for the current financial year is 13.8X, lower than the industry average of 21.9X. It has a PEG ratio of 1.4, lower than the industry average of 2.2.
The company has expected earnings growth of 10.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 7.1% over the last 7 days. The stock price has jumped 28.5% in the past month.
PulteGroup Inc. (PHM - Free Report) is engaged in homebuilding and financial services businesses, primarily in the United States. The forward P/E ratio for the current financial year is 10.1X, lower than the industry average of 13.7X. It has a PEG ratio of 1.5, lower than the industry average of 2.2.
The company has expected earnings growth of 22.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 10.1% over the last 7 days. The stock price has climbed 27.8% in the past month.
Silgan Holdings Inc. (SLGN - Free Report) manufactures and sells rigid packaging for consumer goods products in North America, Europe, and internationally. It operates through three segments: Metal Containers, Closures, and Plastic Containers. The forward P/E ratio for the current financial year is 13.7X, lower than the industry average of 14X. It has a PEG ratio of 1.8, lower than the industry average of 2.8.
The company has expected earnings growth of 28.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 13.7% over the last 7 days. The stock price has surged 17.5% in the past month.
D.R. Horton Inc. (DHI - Free Report) operates as a homebuilding company in East, Midwest, Southeast, South Central, Southwest, and West United States. The forward P/E ratio for the current financial year is 13.2X, lower than the industry average of 13.7X. It has a PEG ratio of 1.2, lower than the industry average of 2.8.
The company has expected earnings growth of 14.5% for the current year (ending September 2020). The Zacks Consensus Estimate for current-year earnings has improved by 0.6% over the last 30 days. The stock price has appreciated 16.4% in the past month.
Nu Skin Enterprises Inc. (NUS - Free Report) develops and distributes a wide range of premium cosmetics, beauty, personal care and wellness products. The forward P/E ratio for the current financial year is 17.4X, lower than the industry average of 40X. It has a PEG ratio of 1.9, lower than the industry average of 2.3.
The company has expected earnings growth of 15.9% for next year. The Zacks Consensus Estimate for next-year earnings has improved by 1.8% over the last 7 days. The stock price has advanced 13.5% in the past month.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained an impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
Image: Bigstock
5 Top-Ranked Value Stocks With Double-Digit Returns in July
Wall Street has been reeling under volatility since mid-June, following the second wave of coronavirus in as many as 24 U.S. states. New cases of COVID-19 jumped as all 50 states started reopening after nearly two months of lockdowns. The resurgence of the deadly virus has raised several questions on the much-hyped V-shaped recovery of the U.S. economy.
Nevertheless, after rallying for three months in a row, Wall Street has been able to maintain its northward journey in July so far. All three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — are in positive territory month to date.
However, resurgence of the pandemic, unavailability of vaccine, intensification of U.S.-China tensions and a delay in the second round of fiscal stimulus by the government led to regular market fluctuations. At this juncture, it makes good sense to buy value stocks that popped in July and still have solid upside.
Resurgence of Coronavirus
All 50 states of the United States have opened their economies in some form since the last week of May after two months of lockdowns. However, within a month's time most of the states have been forced to reclose as new cases of coronavirus jumped in as many as 24 states.
Meanwhile, Conference Board reported that U.S. consumer confidence dropped to 92.6 from the upwardly revised data of 98.3 in June. The consensus estimate was 96. Notably, the expectations subindex — defining consumer's expectation for the next six months — dropped to a four-month low of 91.5 in July from 106.1 in June.
U.S.- China Tensions Heighten
The lingering economic and geo-political conflicts between the United States and China have intensified recently. On Jul 22, the U.S. government instructed China to close its consulate in Houston, citing that it was used for spying purposes. China retaliated asking the United States to close its consulate in Chengdu.
The U.S. government has already imposed trade sanctions on 11 major Chinese companies on account of violating human rights in China. On Jul 21, the Department of Justice indicted two Chinese hackers of stealing trade secrets and trying to steal research on potential drugs for coronavirus treatment.
Delay in Stimulus, Lack of Vaccine
Negotiations between Senate Republicans and Democrats regarding a second round of fiscal stimulus are yet to reach any conclusion. Democrats are eager to maintain the existing $600 weekly unemployment benefit. This stimulus will come to an end by this month end. However, Republicans want to reduce it to a $200 add-on through September.
Moreover, no vaccine or a proper line of treatment is available yet to curb the spread of coronavirus. Although, several healthcare firms have made commendable improvement in clinical trials, it is still not clear whether a vaccine will be available in near future or not.
Our Top Picks
At this stage, investors should be prepared to minimize fluctuations in their portfolio and consequently rebalance it with suitable financial assets to maintain stability. Thus, it would be prudent to pick up value stocks with a favorable Zacks Rank that popped in July and still have momentum.
We have narrowed down our search to five stocks. Each of these carries a Zacks Rank #1 (Strong Buy) and a Value Score of A or B. You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in past month.
Meritage Homes Corp. (MTH - Free Report) designs and builds single-family homes in the United States. It operates through two segments, Homebuilding and Financial Services. The forward P/E ratio for the current financial year is 13.8X, lower than the industry average of 21.9X. It has a PEG ratio of 1.4, lower than the industry average of 2.2.
The company has expected earnings growth of 10.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 7.1% over the last 7 days. The stock price has jumped 28.5% in the past month.
PulteGroup Inc. (PHM - Free Report) is engaged in homebuilding and financial services businesses, primarily in the United States. The forward P/E ratio for the current financial year is 10.1X, lower than the industry average of 13.7X. It has a PEG ratio of 1.5, lower than the industry average of 2.2.
The company has expected earnings growth of 22.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 10.1% over the last 7 days. The stock price has climbed 27.8% in the past month.
Silgan Holdings Inc. (SLGN - Free Report) manufactures and sells rigid packaging for consumer goods products in North America, Europe, and internationally. It operates through three segments: Metal Containers, Closures, and Plastic Containers. The forward P/E ratio for the current financial year is 13.7X, lower than the industry average of 14X. It has a PEG ratio of 1.8, lower than the industry average of 2.8.
The company has expected earnings growth of 28.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 13.7% over the last 7 days. The stock price has surged 17.5% in the past month.
D.R. Horton Inc. (DHI - Free Report) operates as a homebuilding company in East, Midwest, Southeast, South Central, Southwest, and West United States. The forward P/E ratio for the current financial year is 13.2X, lower than the industry average of 13.7X. It has a PEG ratio of 1.2, lower than the industry average of 2.8.
The company has expected earnings growth of 14.5% for the current year (ending September 2020). The Zacks Consensus Estimate for current-year earnings has improved by 0.6% over the last 30 days. The stock price has appreciated 16.4% in the past month.
Nu Skin Enterprises Inc. (NUS - Free Report) develops and distributes a wide range of premium cosmetics, beauty, personal care and wellness products. The forward P/E ratio for the current financial year is 17.4X, lower than the industry average of 40X. It has a PEG ratio of 1.9, lower than the industry average of 2.3.
The company has expected earnings growth of 15.9% for next year. The Zacks Consensus Estimate for next-year earnings has improved by 1.8% over the last 7 days. The stock price has advanced 13.5% in the past month.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained an impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>