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Welcome to Episode #354 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.
It’s early in a new year and that means it’s time to look for what are the best value stocks. Every year in the first week of the year, the Value Investor Podcast screens for top “classic” value stocks.
Last year, the screen returned 13 stocks and Tracey picked out five. Out of those five, four stocks beat the S&P 500 over the last year, without even reinvesting the dividends. The best performer of the group was PVH, which was up 72.6% over the prior year.
Screening for Top Classic Value Stocks
Zacks has a premium screen that looks for stocks with all the classic value fundamentals PLUS top Zacks Ranks of #1 (Strong Buy) or #2 (Buy) AND top Value Style scores of A and B.
To find value it looks for a P/E ratio under 20, a P/S ratio under 1.0, a P/B ratio under 2.0, a P/Cash Flow ratio under 20 and a PEG ratio under 1.0.
It’s a very narrow screen that has never returned more than 20 stocks when it’s been run on the first week of the new year. These are the best of the best.
Running the screen this year, however, and it only returned 5 stocks.
Deluxe Corp. is a “trusted payments and business technology” company. It’s a small cap with a market cap of $920 million.
Shares of Deluxe Corp. are dirt cheap even though its rallied 26.6% over the last year through Jan 3, 2024. It has a P/E of 6.5 and a P/S ratio of just 0.4. Deluxe Corp. has solid free cash flows and is shareholder friendly. It’s paying a dividend currently yielding 5.6%.
Should a small cap stock like Deluxe Corp. be on your short list?
KT Corp. is a large South Korean telecom. It has a market cap of $6.4 billion. Zacks has just one earnings estimate on the company but it’s been revised higher in the last 60 days.
Shares of KT Corp are down 2.4% in the last year, which under performed the S&P 500. But it pays a dividend, currently yielding 5.4%. Earnings of KT Corp. are expected to rise 9.4% in 2024. It has a PEG ratio of 0.9, which means it has both value and growth. That’s a rare combination.
Should a telecom like KT Corp. be on your short list?
Liberty Energy is a North American energy services firm that offers technology to onshore oil and natural gas exploration and production companies. Earnings for Liberty Energy are expected to be up 53% in 2023.
Free cash flow has improved. In the third quarter, Liberty Energy raised its dividend by 40%. It now yields 1.5%. Shares of Liberty Energy are on sale. It trades with a forward P/E of just 6.0.
Is it time to consider energy companies like Liberty Energy again?
OPENLANE is an operator of digital marketplaces for wholesale used vehicles. It recently launched OPENLANE US with exclusive off-lease inventory not available on other digital platforms and thousands of vehicles from franchise and independent dealers. OPENLANE has a market cap of $1.6 billion.
Earnings of OPENLANE are expected to rise 58.1% in 2023 and another 14.7% in 2024. It has a PEG ratio of just 0.6.
Toyota Motor reported 2023 US sales of 2,248,477 vehicles, up 6.6% on a volume basis. EV sales made up one-third of total sales volume in the year.
Shares of Toyota Motor were up 33% in the last year through Jan 3, 2024, but it’s still cheap. It trades with a P/S ratio of just 0.8 and has a PEG ratio of 0.4. Toyota Motor also is shareholder friendly, with a dividend yielding 2.2%.
Is it time to buy the auto manufacturers like Toyota Motor again?
What Else Do You Need to Know About This Year’s Classic Value Stocks?
Tune into this week’s podcast to find out.
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5 Top Classic Value Stocks for 2024
Welcome to Episode #354 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.
It’s early in a new year and that means it’s time to look for what are the best value stocks. Every year in the first week of the year, the Value Investor Podcast screens for top “classic” value stocks.
Last year, the screen returned 13 stocks and Tracey picked out five. Out of those five, four stocks beat the S&P 500 over the last year, without even reinvesting the dividends. The best performer of the group was PVH, which was up 72.6% over the prior year.
Screening for Top Classic Value Stocks
Zacks has a premium screen that looks for stocks with all the classic value fundamentals PLUS top Zacks Ranks of #1 (Strong Buy) or #2 (Buy) AND top Value Style scores of A and B.
To find value it looks for a P/E ratio under 20, a P/S ratio under 1.0, a P/B ratio under 2.0, a P/Cash Flow ratio under 20 and a PEG ratio under 1.0.
It’s a very narrow screen that has never returned more than 20 stocks when it’s been run on the first week of the new year. These are the best of the best.
Running the screen this year, however, and it only returned 5 stocks.
Top value stocks are rare to start the year.
5 Top Classic Value Stocks for 2024
1. Deluxe Corp. (DLX - Free Report)
Deluxe Corp. is a “trusted payments and business technology” company. It’s a small cap with a market cap of $920 million.
Shares of Deluxe Corp. are dirt cheap even though its rallied 26.6% over the last year through Jan 3, 2024. It has a P/E of 6.5 and a P/S ratio of just 0.4. Deluxe Corp. has solid free cash flows and is shareholder friendly. It’s paying a dividend currently yielding 5.6%.
Should a small cap stock like Deluxe Corp. be on your short list?
2. KT Corp. (KT - Free Report)
KT Corp. is a large South Korean telecom. It has a market cap of $6.4 billion. Zacks has just one earnings estimate on the company but it’s been revised higher in the last 60 days.
Shares of KT Corp are down 2.4% in the last year, which under performed the S&P 500. But it pays a dividend, currently yielding 5.4%. Earnings of KT Corp. are expected to rise 9.4% in 2024. It has a PEG ratio of 0.9, which means it has both value and growth. That’s a rare combination.
Should a telecom like KT Corp. be on your short list?
3. Liberty Energy Inc. (LBRT - Free Report)
Liberty Energy is a North American energy services firm that offers technology to onshore oil and natural gas exploration and production companies. Earnings for Liberty Energy are expected to be up 53% in 2023.
Free cash flow has improved. In the third quarter, Liberty Energy raised its dividend by 40%. It now yields 1.5%. Shares of Liberty Energy are on sale. It trades with a forward P/E of just 6.0.
Is it time to consider energy companies like Liberty Energy again?
4. OPENLANE, Inc. (KAR - Free Report)
OPENLANE is an operator of digital marketplaces for wholesale used vehicles. It recently launched OPENLANE US with exclusive off-lease inventory not available on other digital platforms and thousands of vehicles from franchise and independent dealers. OPENLANE has a market cap of $1.6 billion.
Earnings of OPENLANE are expected to rise 58.1% in 2023 and another 14.7% in 2024. It has a PEG ratio of just 0.6.
Should OPENLANE be on your short list?
5. Toyota Motor Corp. (TM - Free Report)
Toyota Motor reported 2023 US sales of 2,248,477 vehicles, up 6.6% on a volume basis. EV sales made up one-third of total sales volume in the year.
Shares of Toyota Motor were up 33% in the last year through Jan 3, 2024, but it’s still cheap. It trades with a P/S ratio of just 0.8 and has a PEG ratio of 0.4. Toyota Motor also is shareholder friendly, with a dividend yielding 2.2%.
Is it time to buy the auto manufacturers like Toyota Motor again?
What Else Do You Need to Know About This Year’s Classic Value Stocks?
Tune into this week’s podcast to find out.