(0:30) - Will 2022 Be The Year For Value Investors? (4:00) - Tracey’s Top Stock Picks (21:20) - Episode Roundup: FANG, PNC, DKS, TOL, MOS Podcast@Zacks.com
Welcome to Episode #260 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks
Value Investor portfolio, shares some of her top value investing tips and stock picks.
Finally, value investor’s patience and discipline is paying off. We’ve bought the “boring” industries and have avoided most of the high-flying growth stocks with high valuations.
In 2021, the hottest industries on Wall Street have been in “value” industries.
Oil stocks, banks, agriculture, retail, home builders, and auto stocks.
Diamondback Energy, PNC Financial, Dick’s Sporting Goods, Toll Brothers and Mosaic are all out performing the S&P 500 this year yet few of them are popular names on Robinhood or Stocktwits.
Those out-of-favor industries were the superstars in 2021.
Can they keep it up into 2022?
5 of this Year’s Top Value Stock Superstars 1. Diamondback Energy ( FANG Quick Quote FANG - Free Report)
Diamondback Energy is a leading independent exploration and production company headquartered in Midland, Texas. It drills in the Permian Basin and is one of the largest drillers in the Permian.
While all of the energy sector is having a great 2021, Diamondback’s shares have soared 119% year-to-date.
Yet Diamondback Energy is still cheap. It is trading with a forward P/E of just 9.5 and has a PEG ratio of 0.4. A PEG under 1.0 usually indicates both growth and value. That’s a rare combination.
How can Diamondback Energy be so cheap after it’s huge rally?
Earnings are expected to jump 269% to $11.24 this year and then gain another 59.4% next year, with the Zacks Consensus Estimate at $17.91.
Diamondback Energy is no value trap.
Should you be loading up on Diamondback Energy for 2022?
2. PNC Financial ( PNC Quick Quote PNC - Free Report)
PNC Financial is a large regional bank with a market cap of $82.6 billion.
Shares are up 33% year-to-date, which is out-performing the S&P 500, up about 22% during that same time.
PNC Financial’s earnings are expected to fall 4.4% next year, but the FOMC hasn’t yet started raising rates. Bank earnings are likely to be volatile next year.
PNC Financial is cheap, with a forward P/E of 13.4 and a PEG ratio of 0.8.
It also pays an attractive dividend, currently yielding 2.5%.
PNC Financial shares have fallen 7% in the last month, is this a buying opportunity?
3. Dick’s Sporting Goods ( DKS Quick Quote DKS - Free Report)
Dick’s Sporting Goods has been a big pandemic winner over the last 18 months.
But in 2021, despite fears of “peak earnings”, the shares have soared another 109%.
Dick’s Sporting Goods earnings are expected to jump 136.1% in 2021, as it made $6.12 last year and the Zacks Consensus Estimate is calling for $14.45 this year.
But will this be the best it could ever be?
The analysts have earnings falling 27% next year, to $10.51.
Dick’s Sporting Goods is still dirt cheap, with a forward P/E of 8.1 and a PEG ratio of 0.6.
Shares are down 7.8% in the last month.
Is this weakness in Dick’s Sporting Goods the time to stock up?
4. Toll Brothers ( TOL Quick Quote TOL - Free Report)
Toll Brothers is the only publicly traded luxury home builder.
While many of the home builder stocks peaked earlier in the year and have weakened on fears of “peak earnings”, Toll Brothers has been 2021’s value stock superstar as shares are up 49% year-to-date.
It’s near it’s 52-week highs but reports earnings on Dec 7.
Toll Brothers has beat on earnings 5 quarters in a row, which is impressive given the pandemic.
Toll Brothers’ earnings are expected to jump 80.6% this year to $6.14 and another 43.9% in 2022, to $8.83.
Shares are dirt cheap, with a forward P/E of just 7.1. It has a PEG ratio of 0.18.
Is Toll Brothers still a hidden stock gem heading into 2022?
5. The Mosaic Company ( MOS Quick Quote MOS - Free Report)
Mosaic is one of the largest fertilizer companies in the world, focusing on potash and phosphates.
Mosaic is bullish heading into 2022 and so are the analysts.
In a Nov 11 update on sales volumes for October 2021, Mosaic said that beyond the fourth quarter, it was seeing strong demand for nutrients, having already committed and priced 40% of the phosphate segment’s expected sales volumes for the first quarter of 2022.
Mosaic’s earnings are expected to soar this year, with the Zacks Consensus up 500% year-over-year to $5.10. The Zacks Consensus for 2022 now stands at $7.80, up another 53%.
But shares have sold off in the last month, falling 19.1% during that time.
Mosaic is cheap. It trades with a forward P/E of just 6.7 and a PEG of 0.96.
Is it time to put Mosaic on your watch list?
Tune Into This Week’s Podcast
What else should you know about this year’s great value stock superstars?
Tune into this week’s podcast to find out.