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Zacks.com featured highlights include BorgWarner Univar Solutions, Marathon Petroleum, Barclays and ModivCare
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For Immediate Release
Chicago, IL – September 2, 2022 – Stocks in this week’s article are BorgWarner Inc. (BWA - Free Report) , Univar Solutions Inc. , Marathon Petroleum (MPC - Free Report) , Barclays PLC (BCS - Free Report) and ModivCare (MODV - Free Report) .
5 Best Value Stocks Based on Discounted PEG Ratios
In a market dealing with external shocks, value investing is fast gaining popularity. The success of value investors like Warren Buffett underscores this. Buffett and his business partner, Charlie Munger, managed to register a 20.1% CAGR for Berkshire Hathaway from 1965 through 2021. This favorably compares with a 10.5% rise of the S&P 500 Index during the same period.
Several other stocks, which have surged significantly in the recent past, have shown the overwhelming success of this pure-play investment strategy. Here we discuss five such stocks BorgWarner Inc., Univar Solutions Inc., Marathon Petroleum, Barclays PLC and ModivCare.
More on Value Investing
While searching for a suitable investment option, value investors with a varied risk appetite are unlikely to consider the price/earnings to growth (PEG) ratio among several other popular metrics like price/earnings (P/E), price/sales (P/S) or price/book value (P/B).
This is because they often find this ratio complicated, considering the limitations in calculating a stock's future earnings growth potential. Yardsticks, such as dividend yield, P/E or P/B, are commonly used to single out stocks trading at a discount.
However, while not taking into account the growth potential of a stock, these ratios might end up convincing us to invest in stocks that are at a discount just because of their poor show. This might often lead to "value traps" — a situation when these value picks start to underperform over the long run as the temporary problems, which once pulled down the share price, turn out to be persistent.
In such a case, even if you buy a stock at less than its fair value, you might still end up paying more. And here comes the importance of this not-so-popular but crucial value investing metric, the PEG ratio.
The PEG ratio is defined as: (Price/ Earnings)/Earnings Growth Rate
A low PEG ratio is always better for value investors.
While P/E alone fails to identify a true value stock, PEG helps find the intrinsic value of a stock.
There are some drawbacks to using the PEG ratio. It doesn't consider the very common situation of changing growth rates, such as the forecast of the first three years at a very high growth rate, followed by a sustainable but lower growth rate over the long term.
Hence, PEG-based investing can turn out to be even more rewarding if some other relevant parameters are also taken into consideration.
Here are five out of the 19 stocks that qualified the screening:
BorgWarner: Michigan-based BorgWarner is a global leader in clean and efficient technology solutions required for combustion, hybrid and electric vehicles. Its products include four-wheel-drive and all-wheel-drive transfer cases (primarily for light trucks and sport utility vehicles or SUVs), as well as automatic transmission and timing chain systems.
Univar Solutions: Based in Downers Grove, IL, Univar Solutions is a global distributor of chemical and ingredients and specialty services provider. Univar's specialized services include chemical waste removal and ancillary services, e-marketing or digital promotion of chemicals for its producers, on-site storage of chemicals for its customers, support services for pest control and agricultural industries.
Univar Solutions currently holds a Zacks Rank #2 and has a Value Score of A. UNVR also has an impressive five-year historical growth rate of 22%.
Marathon Petroleum: Findlay, OH-based Marathon Petroleum is a leading independent refiner, transporter and marketer of petroleum products.In October 2018, Marathon Oil completed the acquisition of its rival Andeavor in a $23.3 billion deal, thereby becoming the nationwide largest refining company by market capitalization. The company operates in two segments: Refining and Marketing and Pipeline Transportation.
Apart from a discounted PEG and P/E, MPC currently sports a Zacks Rank #1 and has a Value Score of A. Marathon Petroleum has a long-term expected growth rate of 23%.
Barclays: Headquartered in London, Barclays PLC is a major global banking and financial services company, with £1,589.2 billion ($1,930.2 billion) in total assets as of Jun 30, 2022.The company restructured its business lines into two divisions — Barclays UK and Barclays International.
Barclays has an impressive long-term expected growth rate of 30.6%. Barclays stock currently has a Value Score of B and carries a Zacks Rank of 2.
ModivCare: This is a technology-enabled healthcare services company, providing a suite of integrated supportive care solutions for public and private payors and patients. ModivCare offers non-emergency medical transportation services for Medicaid or Medicare-eligible members whose limited mobility or financial resources hinder their ability to access necessary healthcare and social services.
MODV currently sports a Zacks Rank #1 and has a Value Score of B. It also has an impressive five-year historical growth rate of 34.6%.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks.com featured highlights include BorgWarner Univar Solutions, Marathon Petroleum, Barclays and ModivCare
For Immediate Release
Chicago, IL – September 2, 2022 – Stocks in this week’s article are BorgWarner Inc. (BWA - Free Report) , Univar Solutions Inc. , Marathon Petroleum (MPC - Free Report) , Barclays PLC (BCS - Free Report) and ModivCare (MODV - Free Report) .
5 Best Value Stocks Based on Discounted PEG Ratios
In a market dealing with external shocks, value investing is fast gaining popularity. The success of value investors like Warren Buffett underscores this. Buffett and his business partner, Charlie Munger, managed to register a 20.1% CAGR for Berkshire Hathaway from 1965 through 2021. This favorably compares with a 10.5% rise of the S&P 500 Index during the same period.
Several other stocks, which have surged significantly in the recent past, have shown the overwhelming success of this pure-play investment strategy. Here we discuss five such stocks BorgWarner Inc., Univar Solutions Inc., Marathon Petroleum, Barclays PLC and ModivCare.
More on Value Investing
While searching for a suitable investment option, value investors with a varied risk appetite are unlikely to consider the price/earnings to growth (PEG) ratio among several other popular metrics like price/earnings (P/E), price/sales (P/S) or price/book value (P/B).
This is because they often find this ratio complicated, considering the limitations in calculating a stock's future earnings growth potential. Yardsticks, such as dividend yield, P/E or P/B, are commonly used to single out stocks trading at a discount.
However, while not taking into account the growth potential of a stock, these ratios might end up convincing us to invest in stocks that are at a discount just because of their poor show. This might often lead to "value traps" — a situation when these value picks start to underperform over the long run as the temporary problems, which once pulled down the share price, turn out to be persistent.
In such a case, even if you buy a stock at less than its fair value, you might still end up paying more. And here comes the importance of this not-so-popular but crucial value investing metric, the PEG ratio.
The PEG ratio is defined as: (Price/ Earnings)/Earnings Growth Rate
A low PEG ratio is always better for value investors.
While P/E alone fails to identify a true value stock, PEG helps find the intrinsic value of a stock.
There are some drawbacks to using the PEG ratio. It doesn't consider the very common situation of changing growth rates, such as the forecast of the first three years at a very high growth rate, followed by a sustainable but lower growth rate over the long term.
Hence, PEG-based investing can turn out to be even more rewarding if some other relevant parameters are also taken into consideration.
Here are five out of the 19 stocks that qualified the screening:
BorgWarner: Michigan-based BorgWarner is a global leader in clean and efficient technology solutions required for combustion, hybrid and electric vehicles. Its products include four-wheel-drive and all-wheel-drive transfer cases (primarily for light trucks and sport utility vehicles or SUVs), as well as automatic transmission and timing chain systems.
BorgWarner has a long-term expected growth rate of 30.5%. BWA currently carries a Zacks Rank of 2 and has a Value Score of A. You can see the complete list of today's Zacks #1 Rank stocks here.
Univar Solutions: Based in Downers Grove, IL, Univar Solutions is a global distributor of chemical and ingredients and specialty services provider. Univar's specialized services include chemical waste removal and ancillary services, e-marketing or digital promotion of chemicals for its producers, on-site storage of chemicals for its customers, support services for pest control and agricultural industries.
Univar Solutions currently holds a Zacks Rank #2 and has a Value Score of A. UNVR also has an impressive five-year historical growth rate of 22%.
Marathon Petroleum: Findlay, OH-based Marathon Petroleum is a leading independent refiner, transporter and marketer of petroleum products.In October 2018, Marathon Oil completed the acquisition of its rival Andeavor in a $23.3 billion deal, thereby becoming the nationwide largest refining company by market capitalization. The company operates in two segments: Refining and Marketing and Pipeline Transportation.
Apart from a discounted PEG and P/E, MPC currently sports a Zacks Rank #1 and has a Value Score of A. Marathon Petroleum has a long-term expected growth rate of 23%.
Barclays: Headquartered in London, Barclays PLC is a major global banking and financial services company, with £1,589.2 billion ($1,930.2 billion) in total assets as of Jun 30, 2022.The company restructured its business lines into two divisions — Barclays UK and Barclays International.
Barclays has an impressive long-term expected growth rate of 30.6%. Barclays stock currently has a Value Score of B and carries a Zacks Rank of 2.
ModivCare: This is a technology-enabled healthcare services company, providing a suite of integrated supportive care solutions for public and private payors and patients. ModivCare offers non-emergency medical transportation services for Medicaid or Medicare-eligible members whose limited mobility or financial resources hinder their ability to access necessary healthcare and social services.
MODV currently sports a Zacks Rank #1 and has a Value Score of B. It also has an impressive five-year historical growth rate of 34.6%.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1975104/5-best-value-stocks-based-on-discounted-peg-ratio
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: https://www.zacks.com/
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.