Here at Zacks, we don’t generally classify stocks as “cheap” or “expensive,” and rather than looking at the stock’s face value, we have a system that puts an emphasis on earnings estimate revisions to find stocks that will hopefully be winners for investors.
That being said, low-priced stocks can be attractive to smaller investors that can’t necessarily afford large stakes in companies with higher priced stocks. When looking at these low-priced stocks, we can look at the same trends in growth, value, and momentum and apply the Zacks Rank to properly analyze the potential that these companies have.
Today, we wanted to focus on one of these trends in particular. Much like a four-leaf clover or the lost city of Atlantis, the term “value stock” has taken on an almost mythical persona these days. In short, a “value stock” is any stock that is undervalued in current market conditions. Finding those stocks, however, is much harder said than done.
Luckily, we at Zacks have a plethora of data to comb through. Additionally, the Zacks Rank can help us identify which value stocks are the most likely to outperform the market. Below we have highlighted three stocks that currently have an “A” grade for Value in our Style Scores system, as well as a Zacks Rank #1 (Strong Buy) listing. All of these stocks are also currently trading for less than $10 per share.
1. Hallador Energy (HNRG - Snapshot Report)
Previous Close: $8.10
Hallador Energy is engaged in the production of steam coal, primarily at the Carlisle underground mine in western Indiana. The company currently has a P/B ratio of 1.09, a P/E ratio of 13.73, and a P/S ratio of 0.87. Its earnings yield of 7.22% comes in well above the industry average of 2.97%. Overall, Hallador has a VGM score of “B” and falls into the top 14% of the Zacks Industry Rank.
2. Lantheus Holdings (LNTH - Snapshot Report)
Previous Close: $8.21
Lantheus Holdings develops medical imaging products for the diagnosis of cardiovascular and other diseases. The company holds a PEG ratio of 1.22, a P/E ratio of 15.30, and a P/S ratio of 1.00. Again, its earnings yield of 5.95% comes in well above the industry average of 1.92%, and it has consistently outperformed the Zacks Consensus Estimate by an average of 266.67% in each of the trailing four quarters.
3. Sorl Auto Parts (SORL - Snapshot Report)
Previous Close: $3.94
Sorl Auto Parts is a China-based maker of air brake valves and hydraulic brake valves, which it sells to a wide range of vehicle manufacturers. The company currently has a P/B ratio of 0.46, a P/E ratio of 5.25, and a P/S ratio of 0.32. Along with its strong value metrics, the company has an “A” grade for Momentum, and shares have gained over 80% in the past four weeks. Sorl also falls into a category of auto manufacturers that sits in the top 13% of the Zacks Industry Rank.
A stock’s market price is not a clear indicator of whether it is a good investment. However, the nice thing about the Zacks Rank is that it can be applied to stocks of any price. Additionally, the Style Scores system, used in conjunction with the Zacks Rank, can help us find stocks that have great metrics in key categories like value. Today, we were able to put this all together and find three stocks with a low price, great value, and a strong Zacks Rank.
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