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Welcome to Episode #349 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.
Stocks remain cheap after the recent stock market correction but what about cheap stocks that also have earnings growth?
That’s a rare combination.
Or is it?
Screening for Classic Value Stocks
Tracey ran a screen that is on Zacks “Basic” screens called “Classic Value Stocks with Growth.” Sounds simple, right?
It looks for stocks with high historical 5-year earnings growth, strong growth for this year and the classic value fundamentals of a low P/E, PEG, P/S and P/B ratios.
This screen does not include the Zacks Rank, however. It’s one of Zacks’ free basic screens available to anyone.
Running this screen, it produced 54 stocks. That’s a lot of cheap stocks. Obviously, some may be Zacks Strong Sells. But Tracey pulled out 5 to take a closer look and none of those 5 were Strong Sells.
Wells Fargo is a big, cheap national bank. It has a forward P/E of 7.8. But bank investors often look to P/B ratios to determine cheapness. You buy at a P/B ratio at 1.0 and sell at 2.0.
Wells Fargo has a P/B ratio of just 0.9. It also pays a dividend, currently yielding 3.4%.
Wells Fargo is a Zacks Rank #2 (Buy) stock. Should it be on your short list?
Toll Brothers is a luxury homebuilder. Even though shares are up 57% year-to-date, it’s still a cheap stock.
Toll Brothers trades with a forward P/E of just 6.6 and a PEG ratio of 0.7. A PEG under 1.0 indicates a company has both value and growth. It’s a Zacks Rank #2 (Buy) stock.
Is it time to consider a homebuilder like Toll Brothers?
Skechers is a global shoe and accessory retailer. It was the most expensive stock on the screen by P/E ratio. It trades with a forward P/E of 14.6. But Skechers also has a P/S ratio under 1.0 at 0.98. A P/S ratio under 1.0 indicates a company is undervalued.
Shares of Skechers are up 18.3% year-to-date. It’s a Zacks Rank #2 (Buy).
Should investors trust in a retailer like Skechers heading into 2024?
JD.com is a supply chain-based technology and services provider in China. Shares of JD.com have sunk this year, falling 54.1% to multi-year lows. The stock is very cheap.
JD.com trades with a forward PE of 9.1. It also has a low P/S ratio of just 0.2.
Yet, JD.com is still a Zacks Rank #3 (Hold).
Should some of the Chinese companies, like JD.com, be on your short list?
PagSeguro operates PagBank in Brazil, which has two business units: Merchant Acquiring and Financial Services. It will report third quarter earnings on Nov 16, 2023, after the market closes.
Shares of PagSeguro are down 15.1% year-to-date. It’s very cheap, with a forward P/E of just 7.4. It also has a P/S ratio of 0.8.
PagSeguro is a Zacks Rank #3 (Hold).
Should investors look outside of the United States for their cheap stocks?
What Else Do You Need to Know About Classic Value Stocks?
Tune into this week’s podcast to find out.
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5 Classic Value Stocks That Also Have Growth
Welcome to Episode #349 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.
Stocks remain cheap after the recent stock market correction but what about cheap stocks that also have earnings growth?
That’s a rare combination.
Or is it?
Screening for Classic Value Stocks
Tracey ran a screen that is on Zacks “Basic” screens called “Classic Value Stocks with Growth.” Sounds simple, right?
It looks for stocks with high historical 5-year earnings growth, strong growth for this year and the classic value fundamentals of a low P/E, PEG, P/S and P/B ratios.
This screen does not include the Zacks Rank, however. It’s one of Zacks’ free basic screens available to anyone.
Running this screen, it produced 54 stocks. That’s a lot of cheap stocks. Obviously, some may be Zacks Strong Sells. But Tracey pulled out 5 to take a closer look and none of those 5 were Strong Sells.
Coincidence?
5 Classic Value Stocks That Also Have Growth
1. Wells Fargo & Co. (WFC - Free Report)
Wells Fargo is a big, cheap national bank. It has a forward P/E of 7.8. But bank investors often look to P/B ratios to determine cheapness. You buy at a P/B ratio at 1.0 and sell at 2.0.
Wells Fargo has a P/B ratio of just 0.9. It also pays a dividend, currently yielding 3.4%.
Wells Fargo is a Zacks Rank #2 (Buy) stock. Should it be on your short list?
2. Toll Brothers, Inc. (TOL - Free Report)
Toll Brothers is a luxury homebuilder. Even though shares are up 57% year-to-date, it’s still a cheap stock.
Toll Brothers trades with a forward P/E of just 6.6 and a PEG ratio of 0.7. A PEG under 1.0 indicates a company has both value and growth. It’s a Zacks Rank #2 (Buy) stock.
Is it time to consider a homebuilder like Toll Brothers?
3. Skechers U.S.A., Inc. (SKX - Free Report)
Skechers is a global shoe and accessory retailer. It was the most expensive stock on the screen by P/E ratio. It trades with a forward P/E of 14.6. But Skechers also has a P/S ratio under 1.0 at 0.98. A P/S ratio under 1.0 indicates a company is undervalued.
Shares of Skechers are up 18.3% year-to-date. It’s a Zacks Rank #2 (Buy).
Should investors trust in a retailer like Skechers heading into 2024?
4. JD.com, Inc. (JD - Free Report)
JD.com is a supply chain-based technology and services provider in China. Shares of JD.com have sunk this year, falling 54.1% to multi-year lows. The stock is very cheap.
JD.com trades with a forward PE of 9.1. It also has a low P/S ratio of just 0.2.
Yet, JD.com is still a Zacks Rank #3 (Hold).
Should some of the Chinese companies, like JD.com, be on your short list?
5. PagSeguro Digital Ltd. (PAGS - Free Report)
PagSeguro operates PagBank in Brazil, which has two business units: Merchant Acquiring and Financial Services. It will report third quarter earnings on Nov 16, 2023, after the market closes.
Shares of PagSeguro are down 15.1% year-to-date. It’s very cheap, with a forward P/E of just 7.4. It also has a P/S ratio of 0.8.
PagSeguro is a Zacks Rank #3 (Hold).
Should investors look outside of the United States for their cheap stocks?
What Else Do You Need to Know About Classic Value Stocks?
Tune into this week’s podcast to find out.