(1:00) - Is Now A Good Time For Small Cap Investments? (9:45) - Tracey’s Top Stock Picks (26:30) - Episode Roundup: RAIL, FNKO, HRTG, KVHI, TWI Podcast@Zacks.com
Welcome to Episode #277 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.
What investor doesn’t like to buy a “cheap” stock? One that is under $20?
Stocks under $20 just seem like more fun and if you can get one that actually has low valuations on a P/E or P/S ratio basis, even better.
Throwing in the Zacks Ranks of #1 (Strong Buy) and #2 (Buy) should also get you rising earnings estimates, which is a tough thing to find in 2022.
Tracey ran a screen for stocks under $20 with a P/S ratio under 1 and a top Zacks Rank along with positive earnings.
It produced 31 stocks.
4 Value Stocks Under $20 with Top Zacks Ranks 1. BBQ Holdings ( BBQ Quick Quote BBQ - Free Report)
BBQ Holdings operates 316 restaurants, including 23 ghost kitchens, across the United States. Its brands include Famous Dave’s of America, Bakers Square and it just bought the Barrio Queen, a Phoenix-based chain with 7 restaurants.
In the fourth quarter, BBQ Holdings saw same-store-sales up 15.5% compared to 2019 for company-owned Famous Dave’s locations and 18.8% for franchise owned. The strong business continued in March 2022, after a slowdown due to Omicron in Jan and Feb 2022.
Shares have fallen 3.9% year-to-date and are cheap, with a forward P/E of 12.7. Yet earnings are expected to rise 66% this year.
Should BBQ Holdings be on your watch list?
2. Energy Transfer ( ET Quick Quote ET - Free Report)
Energy Transfer is energy company that transports and stores natural gas, natural gas liquids, crude and refined products. It is a master limited partnership that is currently paying a dividend yielding 6.2%.
Energy Transfer is a Zacks Rank #1 (Strong Buy).
Shares are up 38.5% year-to-date but are still cheap with a P/S ratio of just 0.5.
Is Energy Transfer a steal?
3. Hewlett Packard Enterprises ( HPE Quick Quote HPE - Free Report)
Hewlett Packard Enterprises is a technology company that offers cloud services, high performance computing and AI, software and storage.
In March 2022, Hewlett Packard Enterprises reported its fiscal first quarter 2022 results and saw strong customer demand that drove order growth up 20% year-over-year.
It re-affirmed its full year revenue guidance but raised EPS guidance.
Hewlett Packard Enterprises expects free cash flow in fiscal 2022 in the range of $1.8 billion to $2 billion.
It is paying a dividend, yielding 3.1% and doing share buybacks. Hewlett Packard Enterprises is cheap, with a forward P/E of just 7.3.
But don’t get it confused with
HP Inc. (. HP Inc. is the hardware business, which makes computers and printers. HPQ Quick Quote HPQ - Free Report)
Warren Buffett’s Berkshire Hathaway recently took a $4 billion position in HP Inc. It too pays a dividend, yielding 2.6%. But HP Inc isn’t under $20 while Hewlett Packard Enterprises is.
Did Buffet buy the wrong company? Should Berkshire have bought Hewlett Packard Enterprises, and it’s cheap free cash flow, instead?
4. Bassett Furniture ( BSET Quick Quote BSET - Free Report)
Bassett Furniture is a furniture manufacturer that operates 96 stores and also sells wholesale. Furniture has been hot during the pandemic and Bassett continued to see strength in the first quarter of 2022.
Revenue was up 16% in the first quarter as Bassett Furniture continued to work through its backlog.
However, inflationary pressures are a challenge. Bassett said that every raw material involved in furniture production continued to escalate in the quarter. As a result, it implemented its sixth wholesale price increase in the last 15 months.
Over the last year, shares have fallen 33.7% on fears that 2021 was “peak” earnings.
Bassett is cheap, with a forward P/E of 8.9. It also pays a dividend, now yielding 3.3%.
Is Bassett Furniture oversold in 2022?
What Else Do You Need to Know About Value Stocks Under $20?
Tune into this week’s podcast to find out.