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The idea of ‘value investing’ is simple: invest in those stocks which are undervalued, i.e. those stocks which have its market value less than their ‘fundamental value’ or ‘intrinsic value’ based upon the investment horizon. However, finding out a stock’s intrinsic value is not an easy task.
Recognizing an undervalued stock is more an art than rocket science. An investor needs to use the right tools and metrics to select such stocks. Further, a volatile macroeconomic scenario makes things more complicated to predict the fundamental value of any security at this moment. An investor should not concentrate his/her selection in a particular sector or an industry and must look to diversify his/her holdings across various sectors.
While weightage of different sectors are generally left upon the investors to decide, identifying attractive industries remains a challenging job. This is where our proven Zacks Rank system can help support an investor by not only identifying the attractive stocks but also zoom in on those industries which we believe will create value to an investor’s portfolio going forward.
Focus on Small Caps
While large-cap stocks are usually a safe bet, finding value is definitely hard to find by in such stocks. Thus, investors who are looking to take a little more risk and have the GARP (Growth at a Reasonable Price) principle in mind can look forward to investing in small cap stocks. This is because now only they are traded at a lower price compared to its large cap counterparts, but also have the opportunity to record higher growth.
Using our quantitative and qualitative wizardry, viz the popular Zacks Rank and Value Style scores, we have selected four small cap value stocks which you may consider adding to the portfolio.
Benchmark Electronics Inc. (BHE - Free Report) with a Zacks Rank #1 and Value Score ‘A.’
Benchmark Electronics provides contract electronics manufacturing and design services to original equipment manufacturers in select industries. The company has a market cap of $1.18 billion. It belongs to the Electronic Manufacturing Services industry which has a Zacks Industry Rank of #16.
Enviva Partners, LP (EVA - Free Report) with a Zacks Rank #1 and Value Score ‘A.’
Enviva Partners is a master limited partnership which owns and operates wood pellet production plants. The company has a market cap of $311.53 million. It belongs to the Biofuels industry which has a Zacks Industry Rank of #23.
Standard Motor Products Inc. (SMP - Free Report) with a Zacks Rank #1 and Value Score ‘A.’
Standard Motor Products manufactures and distributes replacement parts for motor vehicles. The company has a market cap of $970 million. It belongs to the Auto/Truck Replacement industry which has a Zacks Industry Rank of #3.
Sanderson Farms, Inc. with a Zacks Rank #1 and Value Score ‘A.’
Sanderson Farms is a fully-integrated poultry processing company engaged in the production, processing, marketing and distribution of fresh and frozen chicken products. It belongs to the Food Meat Products industry which has a Zacks Industry Rank of #23.
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4 Best Small-Cap Stocks for Value Investors
The idea of ‘value investing’ is simple: invest in those stocks which are undervalued, i.e. those stocks which have its market value less than their ‘fundamental value’ or ‘intrinsic value’ based upon the investment horizon. However, finding out a stock’s intrinsic value is not an easy task.
Recognizing an undervalued stock is more an art than rocket science. An investor needs to use the right tools and metrics to select such stocks. Further, a volatile macroeconomic scenario makes things more complicated to predict the fundamental value of any security at this moment. An investor should not concentrate his/her selection in a particular sector or an industry and must look to diversify his/her holdings across various sectors.
While weightage of different sectors are generally left upon the investors to decide, identifying attractive industries remains a challenging job. This is where our proven Zacks Rank system can help support an investor by not only identifying the attractive stocks but also zoom in on those industries which we believe will create value to an investor’s portfolio going forward.
Focus on Small Caps
While large-cap stocks are usually a safe bet, finding value is definitely hard to find by in such stocks. Thus, investors who are looking to take a little more risk and have the GARP (Growth at a Reasonable Price) principle in mind can look forward to investing in small cap stocks. This is because now only they are traded at a lower price compared to its large cap counterparts, but also have the opportunity to record higher growth.
Using our quantitative and qualitative wizardry, viz the popular Zacks Rank and Value Style scores, we have selected four small cap value stocks which you may consider adding to the portfolio.
Benchmark Electronics Inc. (BHE - Free Report) with a Zacks Rank #1 and Value Score ‘A.’
Benchmark Electronics provides contract electronics manufacturing and design services to original equipment manufacturers in select industries. The company has a market cap of $1.18 billion. It belongs to the Electronic Manufacturing Services industry which has a Zacks Industry Rank of #16.
Enviva Partners, LP (EVA - Free Report) with a Zacks Rank #1 and Value Score ‘A.’
Enviva Partners is a master limited partnership which owns and operates wood pellet production plants. The company has a market cap of $311.53 million. It belongs to the Biofuels industry which has a Zacks Industry Rank of #23.
Standard Motor Products Inc. (SMP - Free Report) with a Zacks Rank #1 and Value Score ‘A.’
Standard Motor Products manufactures and distributes replacement parts for motor vehicles. The company has a market cap of $970 million. It belongs to the Auto/Truck Replacement industry which has a Zacks Industry Rank of #3.
Sanderson Farms, Inc. with a Zacks Rank #1 and Value Score ‘A.’
Sanderson Farms is a fully-integrated poultry processing company engaged in the production, processing, marketing and distribution of fresh and frozen chicken products. It belongs to the Food Meat Products industry which has a Zacks Industry Rank of #23.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>