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Zacks.com featured highlights: Hasbro, Asbury Automotive Group, Home Depot, Innoviva and ZIOPHARM Oncology

HAS ABG HD INVA ZIOP

Trades from $3

For Immediate Release

Chicago, IL – October 07, 2016 - Stocks in this week’s article include: Hasbro Inc. (NASDAQ:(HAS - Free Report) –Free Report),Asbury Automotive Group Inc. (NYSE:(ABG - Free Report) –Free Report),Home Depot Inc. (NYSE:(HD - Free Report) –Free Report),Innoviva Inc. (NASDAQ:(INVA - Free Report) –Free Report) and ZIOPHARM Oncology Inc. (NASDAQ:(ZIOP - Free Report) – Free Report).

Screen of the Week of Zacks Investment Research:

Look Beyond Bargain Hunting: Buy 5 Stocks with Rising P/E

Investors are always hunting for stocks with low P/E which indicates undervaluation. The ratio, which is obtained by dividing a stock’s current market price with its historical or estimated earnings, measures how much an investor needs to shell out per dollar of earnings.

The lower the P/E of a stock, the better for a value investor. This is because value investors believe that a company’s earnings growth potential is not priced in at the current level and thus the stock has higher chances of outperformance, going forward.

Naturally, there are very few investors who pay attention to stocks with an increasing P/E. But this often overlooked trend can prove worthwhile in finding great stocks. Let’s dig a little deeper.

Rising P/E: An Useful Tool

Investors should note that stock prices move in tandem with earnings performance. If earnings come in stronger, the price of a stock shoots up. Solid quarterly earnings and the forward guidance in turn boost earnings forecasts, leading to stronger demand for the stock and an uptrend in its price.

So, if the price is rising steadily, it means that investors are assured of the stock’s fundamental strength and expect some strong positives out of it. Also, studies have revealed that stocks have seen their P/E ratios jump over 100% from their breakout point in the cycle. All these make the case for a rising P/E a lucrative investing criterion.

The Winning Strategy

In order to shortlist stocks that are exhibiting an increasing P/E, we chose the following as our primary screening parameters.

EPS growth estimate for the current year is greater than or equal to last year’s actual growth

Percentage change in last year EPS should be greater than or equal to the previous year

(These two criteria point to flat earnings or a growth trend over the years).

Percentage change in price over four weeks greater than the percentage change in price over 12 weeks

Percentage change in price over 12 weeks greater than percentage change in price over 24 weeks

(These two criteria show that price of the stock is increasing consistently over the said timeframes).

Percentage price change for four weeks relative to the S&P 500 greater than the percentage price change for 12 weeks relative to the S&P 500

Percentage price change for 12 weeks relative to the S&P 500 greater than the percentage price change for 24 weeks relative to the S&P 500

(Here, the case for consistent price gains gets even stronger as it displays percentage price changes relative to the S&P 500).

Percentage price change for 12 weeks is 20% higher than or equal to the percentage price change for 24 weeks, but it should not exceed 100%

(A 20% increase in the price of a stock from the breakout point gives cues of an impending uptrend. But a jump of over 100% indicates that there is limited scope for further upside and that the stock might be due for a reversal).

In addition, we place a few other criteria that lead us to some likely outperformers.

Zacks Rank less than or equal to 2: Only companies with a Zacks Rank #1 (Strong Buy) or 2 (Buy) rating can get through.

Average 20-day Volume greater than or equal to 50,000: High trading volume implies that the stocks have adequate liquidity.

Just these few criteria narrowed down the universe from over 7,700 stocks to just 14.

Here are five out of the 14 stocks:

Hasbro Inc. (NASDAQ:(HAS - Free Report) – Free Report) : This is a games and toys company within the Zacks Industry Rank in the top 7%. The stock has a Zacks Rank #2.

Asbury Automotive Group Inc. (NYSE:(ABG - Free Report) – Free Report) : One of the largest automotive retailers in the U.S., company falls within the Zacks Industry Rank in the top 13%. The stock has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here .

The Home Depot Inc. (NYSE:(HD - Free Report) – Free Report) : This Zacks Rank #2 company is a home improvement retailer. The Zacks Industry Rank is in the top 40%.

Innoviva Inc. (NASDAQ:(INVA - Free Report) – Free Report) : The Zacks Rank #2 company is into the biopharmaceuticals industry. The Zacks Industry Rank is in the top 40%.

ZIOPHARM Oncology Inc. (NASDAQ:(ZIOP - Free Report) – Free Report) : This is a biopharmaceutical company dealing with in-licensed cancer drugs. The Zacks Industry Rank is in the top 40% and the stock has a Zacks Rank #2.

You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.

The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

Click here to sign up for a free trial to the Research Wizard today .

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance .

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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

About Screen of the Week

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Contact: Jim Giaquinto
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.