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The markets are clearly euphoric about the coronavirus vaccines and the wonders they will do for demand and consumption this year.
But COVID didn’t treat all sectors alike. Tech, auto and construction for instance actually benefited. And the best part is that there are strong underlying drivers in each of these markets that point to sustained strength.
This year these hot sectors will be joined by others like medical, aerospace, industrial and basic materials. That means, we are looking at a large number of bounce-back stories in addition to the secular growth stories.
And bounce-backs always mean near-term gains for investors.
So today, I thought I’d keep it simple. I thought I’d pick on companies that were either beaten down or subdued by the pandemic last year, but are expected to jump back and post attractive growth this year. All the better if they also offer income and have attractive valuations. So, let’s get started-
Zacks #1 (Strong Buy)-ranked Bassett Furniture Industries, Inc. (BSET - Free Report) went from a 45 cent profit in 2019 to a 44-cent loss in 2020. But guess what. The analyst providing estimates for the company expects it to generate a $1.38 profit this year. Talk about a turnaround story!
The company’s operating focus is on affordable custom-built furniture that is ready for delivery in the home within thirty days. Its stores offer the latest on-trend furniture styles, more than a thousand upholstery fabrics and coordinated decorating accessories. Customers can choose what they need and have a design specialist visit their homes at no extra cost.
The Furniture industry to which Basset belongs is in the top 10% of Zacks-classified industries. And as you probably already know, about half a stock’s price appreciation is related to the group that it’s in.
The stock’s Value, Growth and Momentum Scores are B, A and C, respectively. So it is suitable for most investors.
Basset has a PEG (price-to-earnings growth) ratio of 0.88 and a price to sales (P/S) ratio of 0.51X, meaning that you currently have to pay less than its sales or earnings growth potential right now.
What’s more, it pays a dividend that yields 2.56%.
I also like #2 (Buy) ranked KB Home (KBH - Free Report) , which being in the construction sector, hasn’t done as bad as Basset in 2020. So its 2020 earnings of $2.89 were in fact slightly ahead of the 2019 earnings of $2.85. In 2021 however, earnings are expected to soar to $4.27.
This kind of growth can only be called fantastic, especially since this isn’t your typical new and therefore, fast-growing company. It’s a mature company, one of the largest home builders in California in fact, catering to first time, move-up and active adult homebuyers on both acquired and developed lands. Its offerings include attached and detached single-family homes, town homes and condominiums.
The Building Products - Home Builders industry, to which it belongs, is also in the top 10% of Zacks-classified industries.
The stock’s Value, Growth and Momentum Scores are A, C and B, respectively. So it is suitable for most investors.
KB has a PEG ratio of 0.55 and a P/S ratio of 0.65X, which of course means that it is undervalued on both counts.
Plus there’s the bonus. It pays a dividend that yields 1.83%.
Next we have #2 ranked M.D.C. Holdings, Inc. , which is another home builder of similar stature as KB. MDC has had a super year in 2020, with its earnings going from $3.72 to $5.09. But I couldn’t help adding this one simply because it is not showing any signs of slowing down. So I’m seeing a 2021 estimate of $6.40 for the current year, which you just have to call out.
The stock’s Value, Growth and Momentum Scores are B, C and A, respectively. So it is suitable for most investors.
MDC has a PEG ratio of 0.50 and a P/S ratio of 0.78X, so the valuation is attractive.
The company’s dividend yields 3.51%.
Zacks #2 ranked WestRock Company (WRK - Free Report) is one of the largest integrated producers of containerboard by tons produced, one of the largest producers of high-graphics preprinted linerboard on the basis of net sales in North America and one of the largest paper recyclers in North America. It targets the consumer and corrugated packaging markets.
The Paper and Related Products industry to which it belongs is in the top 19% of Zacks-classified industries.
WestRock’s earnings plunged from $3.98 to $2.74 in its fiscal year ended September. But the good news is that its 2021 and 2022 earnings are currently expected to grow to $3.57 and $4.10, respectively.
Its Value, Growth and Momentum Scores are A, C and A, respectively, which means that it is particularly suitable for value investors.
WRK has a PEG ratio of 0.75 and a P/S ratio of 0.69X, which means that it is undervalued on both counts.
Its dividend yields 1.73%.
Zacks #2-ranked Manulife Financial Corp (MFC - Free Report) is a Canadian company with global operations. The Life Insurance industry, to which it belongs, isn’t so hot right now (bottom 12% of Zack-classified industries).
But the company’s earnings outlook is encouraging. After dropping off from $2.24 in 2019 to just $2.06 in 2020, the stock is now expected to generate earnings of $2.32 this year.
Its Value, Growth and Momentum Scores are A, F and D, respectively, which means that it is particularly suitable for value investors.
MFC has a PEG ratio of 0.80 and a P/S ratio of 0.67X, which of course means that it is undervalued on both counts.
It pays a dividend that yields 4.53%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Image: Bigstock
5 Stocks with Great Bounce-back Potential In 2021
The markets are clearly euphoric about the coronavirus vaccines and the wonders they will do for demand and consumption this year.
But COVID didn’t treat all sectors alike. Tech, auto and construction for instance actually benefited. And the best part is that there are strong underlying drivers in each of these markets that point to sustained strength.
This year these hot sectors will be joined by others like medical, aerospace, industrial and basic materials. That means, we are looking at a large number of bounce-back stories in addition to the secular growth stories.
And bounce-backs always mean near-term gains for investors.
So today, I thought I’d keep it simple. I thought I’d pick on companies that were either beaten down or subdued by the pandemic last year, but are expected to jump back and post attractive growth this year. All the better if they also offer income and have attractive valuations. So, let’s get started-
Zacks #1 (Strong Buy)-ranked Bassett Furniture Industries, Inc. (BSET - Free Report) went from a 45 cent profit in 2019 to a 44-cent loss in 2020. But guess what. The analyst providing estimates for the company expects it to generate a $1.38 profit this year. Talk about a turnaround story!
The company’s operating focus is on affordable custom-built furniture that is ready for delivery in the home within thirty days. Its stores offer the latest on-trend furniture styles, more than a thousand upholstery fabrics and coordinated decorating accessories. Customers can choose what they need and have a design specialist visit their homes at no extra cost.
The Furniture industry to which Basset belongs is in the top 10% of Zacks-classified industries. And as you probably already know, about half a stock’s price appreciation is related to the group that it’s in.
The stock’s Value, Growth and Momentum Scores are B, A and C, respectively. So it is suitable for most investors.
Basset has a PEG (price-to-earnings growth) ratio of 0.88 and a price to sales (P/S) ratio of 0.51X, meaning that you currently have to pay less than its sales or earnings growth potential right now.
What’s more, it pays a dividend that yields 2.56%.
I also like #2 (Buy) ranked KB Home (KBH - Free Report) , which being in the construction sector, hasn’t done as bad as Basset in 2020. So its 2020 earnings of $2.89 were in fact slightly ahead of the 2019 earnings of $2.85. In 2021 however, earnings are expected to soar to $4.27.
This kind of growth can only be called fantastic, especially since this isn’t your typical new and therefore, fast-growing company. It’s a mature company, one of the largest home builders in California in fact, catering to first time, move-up and active adult homebuyers on both acquired and developed lands. Its offerings include attached and detached single-family homes, town homes and condominiums.
The Building Products - Home Builders industry, to which it belongs, is also in the top 10% of Zacks-classified industries.
The stock’s Value, Growth and Momentum Scores are A, C and B, respectively. So it is suitable for most investors.
KB has a PEG ratio of 0.55 and a P/S ratio of 0.65X, which of course means that it is undervalued on both counts.
Plus there’s the bonus. It pays a dividend that yields 1.83%.
Next we have #2 ranked M.D.C. Holdings, Inc. , which is another home builder of similar stature as KB. MDC has had a super year in 2020, with its earnings going from $3.72 to $5.09. But I couldn’t help adding this one simply because it is not showing any signs of slowing down. So I’m seeing a 2021 estimate of $6.40 for the current year, which you just have to call out.
The stock’s Value, Growth and Momentum Scores are B, C and A, respectively. So it is suitable for most investors.
MDC has a PEG ratio of 0.50 and a P/S ratio of 0.78X, so the valuation is attractive.
The company’s dividend yields 3.51%.
Zacks #2 ranked WestRock Company (WRK - Free Report) is one of the largest integrated producers of containerboard by tons produced, one of the largest producers of high-graphics preprinted linerboard on the basis of net sales in North America and one of the largest paper recyclers in North America. It targets the consumer and corrugated packaging markets.
The Paper and Related Products industry to which it belongs is in the top 19% of Zacks-classified industries.
WestRock’s earnings plunged from $3.98 to $2.74 in its fiscal year ended September. But the good news is that its 2021 and 2022 earnings are currently expected to grow to $3.57 and $4.10, respectively.
Its Value, Growth and Momentum Scores are A, C and A, respectively, which means that it is particularly suitable for value investors.
WRK has a PEG ratio of 0.75 and a P/S ratio of 0.69X, which means that it is undervalued on both counts.
Its dividend yields 1.73%.
Zacks #2-ranked Manulife Financial Corp (MFC - Free Report) is a Canadian company with global operations. The Life Insurance industry, to which it belongs, isn’t so hot right now (bottom 12% of Zack-classified industries).
But the company’s earnings outlook is encouraging. After dropping off from $2.24 in 2019 to just $2.06 in 2020, the stock is now expected to generate earnings of $2.32 this year.
Its Value, Growth and Momentum Scores are A, F and D, respectively, which means that it is particularly suitable for value investors.
MFC has a PEG ratio of 0.80 and a P/S ratio of 0.67X, which of course means that it is undervalued on both counts.
It pays a dividend that yields 4.53%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>