(0:30) - How To Use The PEG Ratio To Find Strong Stocks For Your Portfolio (8:00) - Tracey’s Top Stock Picks (17:40) - Episode Roundup: VRT, TEX, LW Podcast@Zacks.com
Welcome to Episode #331 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks
, shares some of her top value investing tips and stock picks. Value Investor portfolio
While value investors look for cheap stocks, that doesn’t mean they don’t want to own companies that are also growing. What if they can own a value stock that also has growth?
That would be the best of both worlds and a powerful combination.
Screening for Cheap Growth Stocks
You can find value stocks with growth by screening using the PEG ratio. The PEG ratio is the P/E divided by the annual EPS growth. What’s the P/E? That’s price over earnings.
But don’t worry, you don’t have to figure all of this out. The PEG ratio is already calculated for you. It can be found on just about every financial website, including Zacks.com.
What should you look for in a PEG? To get value and growth, screen for a PEG ratio under 1.0.
Additionally, if you add the power of the Zacks Rank, and screen for Zacks Rank #1 (Strong Buy) and #2 (Buy) stocks, you should also find companies that have rising earnings estimates.
Running this screen, Tracey got 26 stocks.
3 Cheap Stocks with Growth 1. Vertiv Holdings Co. ( VRT Quick Quote VRT - Free Report)
Vertiv solves challenges facing data centers, commercial and industrial facilities with a portfolio of power, cooling and IT infrastructure solutions. It has a market cap of $7.6 billion.
When it reported first quarter results in April, the company raised full year profit guidance. Shares of Vertiv are trading at new 52-week highs, up 46.5% year-to-date. But Vertiv is still cheap with a forward P/E of 16 and a PEG ratio under 1.0.
It’s a Zacks Rank #1 (Strong Buy).
Should Vertiv be on your short list?
2. Terex Corp. ( TEX Quick Quote TEX - Free Report)
Terex is a global manufacturer of materials processing machinery and aerial work platforms. It has a market cap of $3.7 billion.
In the first quarter sales were up 23% to $1.2 billion. Terex was bullish, raising full year EPS guidance.
Shares of Terex are up 30% year-to-date but are still cheap. It has a forward P/E of just 9.1. Terex also pays a dividend, currently yielding 1.1%.
It is a Zacks Rank #1 (Strong Buy).
Is it too late to buy Terex in 2023?
3. Lamb Weston Holdings, Inc. ( LW Quick Quote LW - Free Report)
Lamb Weston is a leading supplier of frozen potato, sweet potato, appetizer, and vegetable products. It is a global company with a market cap of $16 billion.
In the fiscal third quarter 2023, Lamb Weston raised full year targets. Earnings for fiscal 2023 are now expected to rise 116.8% year-over-year to $4.51 from $2.08 last year.
Shares of Lamb Weston are up 26% year-to-date but are still cheap with a PEG ratio of 0.5. It also pays a dividend of 1%.
It is also a Zacks Rank #1 (Strong Buy).
Should Lamb Weston be on your short list?
What Else Should You Know About Finding Top Value and Growth Stocks?
Tune into this week’s podcast to find out.