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5 Popular Stocks on Sale: Values or Traps?

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  • (0:30) - Finding Popular Stocks That Are On Sale
  • (6:45) - Tracey’s Top Stock Picks: Creating A Strong Watch List
  • (29:10) - Episode Roundup: PANW, LULU, TSLA, NKE, SBUX


Welcome to Episode #363 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.

While the S&P 500 continues to hit new all-time highs, not every stock has been soaring in 2024. In fact, there are some that are in the red year-to-date, including some former high-fliers.

The market is ignoring these stocks. They’ve gone on sale. But are they a value or are they a trap?

How to Tell if a Stock is a Value, or a Trap

Remember, the key to telling if a stock is a true value, or if it’s a trap, is to check out the analyst earnings estimates. Is the full year consensus expected to fall year-over-year? Is the earnings growth slowing?

That usually indicates there is something going on in the business which then can translate over to the stock price.

A true value will still have rising earnings growth for this year and next.

Finding Value in Fallen Growth Stocks

Not all value stocks are classic values with low P/E, P/B, P/S or PEG ratios. Some stocks may be values because they are trading at a discount to their industry peers or because a plunge in the shares has made the company historically cheap.

This week, Tracey looks at 5 stocks that have fallen from their former glory. They are on “sale”. But are they a true deal?

5 Growth Stocks That are on Sale

1.       Palo Alto Networks, Inc. (PANW - Free Report)

Palo Alto Networks is one of the popular cybersecurity stocks. But after its last earnings report, the shares dropped sharply. Year-to-date, shares of Palo Alto Networks are down 4.3%.

Earnings are expected to grow 23.6% this year while sales rise another 16%. Palo Alto Networks still trades with a forward P/E of 52, even as the shares have pulled back.

Is Palo Alto Networks a value or a trap?

2.       Lululemon Athletica Inc. (LULU - Free Report)

Lululemon is a specialty retailer famous for its popular yoga pants. Shares plunged 17% over the last month after the company guided for next year earnings below the Zacks Consensus.

Earnings of Lululemon are still expected to rise 10.8% this year on sales growth of 12%. It has gotten cheaper on a P/E basis since the sell-off. Lululemon now trades at 27x forward earnings.

Is Lululemon a value or a trap?

3.       Tesla, Inc. (TSLA - Free Report)

EV sales are down and so are the shares of Tesla in 2024. Tesla shares have fallen 28.8% year-to-date.

Analysts are bearish on Tesla. In just the last week, one estimate has been cut for this year. Earnings are expected to fall 2.2% this year.

Shares aren’t cheap on a P/E basis at 59. But Tesla investors have never cared about the P/E.

Is Tesla a value or a trap?

4.       Nike Inc. (NKE - Free Report)

Nike shares recently plunged after the company reported its fiscal third quarter 2024 earnings. Nike is down 10.5% over the last month and over the last year, is down 23.3%.

Analysts have been adjusting their earnings estimates over the last week. 8 are higher for fiscal 2024. Nike’s earnings are expected to rise 15.2% this year. But 9 estimates have been cut for fiscal 2025 as well.

Nike trades with a forward P/E of 25. It pays a dividend yielding 1.6%.

Is Nike a value or a trap after the sell-off?

5.       Starbucks Corp. (SBUX - Free Report)

Starbucks shares have been under the weather for the last year. They’ve been ignored by the Street. Starbucks shares recently traded near 52-week lows, down 7.1% during that time.

Earnings of Starbucks are expected to rise 14.7% in fiscal 2024 on sales growth of 7.8%. Starbucks trades with a forward P/E of 22.5.

Is Starbucks a value or is it a trap?

What Else Do You Need to Know About Stocks on Sale?  

Tune into this week’s podcast to find out.

[In full disclosure, Tracey owns shares of LULU and SBUX in her personal portfolio.]


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