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2 Highly-Ranked, Market-Beating Value Stocks to Buy Amid Bank Fears

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The banking industry turmoil continues to cause unease and volatility across the stock market. Yet, investors should try to look beyond the jitters and remember that the S&P 500 and the Nasdaq are still trading solidly above their recent SVB collapse lows.

Even with the recent swings and big moves, the benchmark is up about 4% YTD and the Nasdaq has jumped around 13%. And despite the fears, the VIX (CBOE Volatility Index) remains way below where it was in October and at various stages last year.

The S&P 500 is currently trading between its 200-day and 50-day moving averages, while the tech-heavy index remains above both. Investors should also note that the S&P 500 and the Nasdaq already experienced a so-called golden cross in 2023. This bullish technical indicator occurs when the shorter-term moving average crosses above the long-term trend.  

Wall Street is growing more convinced that the Fed is near the end of its rate hike efforts. Plus, traders are now betting that Jay Powell and the Fed will start lowering rates by as early as its June FOMC meeting, according to the CME FedWatch Tool.

All of this is to say that investors might want to keep buying stocks even though the market waters are choppy right now.

Today we dig into two highly-ranked Zacks stocks from different areas of the economy that offer investors solid outlooks and reasonable valuations, which is key as technology stocks get a bit overheated again. Both stocks have also easily outperformed the market over the last decade.

United Rentals (URI - Free Report)

United Rentals ((URI - Free Report) ) is a global rental equipment powerhouse, and its positive earnings revisions help it land a Zacks Rank #2 (Buy) right now, alongside its overall “A” VGM grade. The firm posted impressive results and provided upbeat guidance earlier this year, with its consensus EPS estimate 12% higher for 2023 and up 10% for 2024.

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URI has been able to lift its prices along with inflation, while benefiting from its bolstered reach and portfolio after it completed its Ahern Rentals acquisition in late 2022. The company offers a wide array of large and small equipment for clients ranging from utility firms and construction companies to homebuilders and homeowners. Alongside its core rental business, United Rentals sells used equipment, which is especially appealing during times of economic uncertainty.

United Rentals in late January announced the restart of its share repurchase program and introduce a dividend. These moves highlight URI’s stability and financial firepower.

Zacks estimates call for URI’s sales to climb 20% in 2023 and another 4% in 2024 against a difficult-to-compete-against period. Meanwhile, its adjusted earnings are projected to surge by 29% and 9%, respectively.

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URI has surged 570% in the past 10 years to crush the S&P 500’s 155% and the Zacks construction sector’s 103%, which includes a 300% run off its covid selloff lows. Plus, United Rentals has pulled back significantly after it soared to fresh highs in early March.

URI is currently trading 23% below its records and is floating near oversold RSI levels. The drawdown, coupled with its improved earnings outlook, has URI trading at a 50% discount to its own decade-long and 15% under its median at 8.9X forward 12-month earnings.

ICF International, Inc. (ICFI - Free Report)

ICF International ((ICFI - Free Report) ) is a global consulting and digital services provider that works with both the private and public sectors. ICF boasts a strong backlog and it operates in high-growth areas of the economy such as IT modernization/digitization, energy efficiency, environmental and infrastructure services, public health, and beyond.

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ICF boasts contracts with extremely reliable and massive clients such as the U.S. Department of Defense and the Environmental Protection Agency. Federal and state, as well as local government clients and its commercial energy work, represented around 85% of ICF’s fourth quarter revenue.

Plus, the consulting giant landed record contract wins in 2022, with a large chunk marking new business. ICF closed last year with a business development pipeline worth over $8.5 billion, up 20% YoY.

ICF’s improving earnings outlook helps it grab a Zacks Rank #1 (Strong Buy) at the moment. Zacks estimates call for the company’s revenue to climb 11% in both 2023 and 2024 (on top of 15% in FY22) to reach $2.19 billion.

Meanwhile, ICF’s adjusted earnings are projected to jump 9% and 11%, respectively. This consistent and strong top and bottom-line growth helps highlight the benefits of its robust offerings and government clients, who rarely have the need to cut back. And ICF pays a dividend.

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ICFI shares have climbed roughly 290% in the last 10 years vs. the benchmark’s 155%. More recently, ICFI is up 20% over the trailing 24 months, with the market now roughly sideways. ICFI stock is up 6% YTD and it still trades 29% below its average Zacks price target.

IFC was trading around 12% below its October record on Friday. The stock also trades at a 10% discount to the S&P 500 and 30% under its Zacks econ sector. Plus, ICF offers 20% value to its own 10-year highs and matches its median at 16.3X forward earnings. 

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