For Immediate Release
Chicago, IL – October 13, 2016 - Stocks in this week’s article include: Chemours Company (NYSE:(CC - Free Report) -Free Report),Rio Tinto plc (NYSE:(RIO - Free Report) -Free Report),POSCO (NYSE:(PKX - Free Report) -Free Report),Telenor ASA (OTCMKTS:(TELNY - Free Report) -Free Report) and Western Refining, Inc. (NYSE: -Free Report).
Screen of the Week of Zacks Investment Research:
5 Cheap PEG Stocks for Value Seeking Investors
Value investors with varied risk appetite are unlikely to count on price/earnings to growth (PEG) ratio among a number of other popular metrics like price/earnings (P/E), price/sales (P/S) or price/book value (P/B) while making investment decisions. This is because they often find this ratio complicated considering the limitations in calculating the future earnings growth potential of a stock.
We note that P/E, P/B or P/S can easily measure whether a stock is at present trading at a discount. However, these fail to give any idea about the future growth trend of a stock. In such a case, even if you buy a stock at less than its fair value, you might still end up paying more.
The PEG ratio on the other hand, with the term ‘growth’ within it, is perfect for accurately calculating the future earnings (EPS) growth rate of a company.
The PEG ratio is defined as: (Price/ Earnings)/ Earnings Growth Rate
A lower PEG ratio is always better for value investors.
While P/E fails to identify a true value stock, PEG helps to find the intrinsic value of a stock.
There are some drawbacks to using the PEG ratio though. It doesn’t consider the very common situation of changing growth rates such as the forecast for the first three years at a very high rate followed by a sustainable but lower growth rate in the long term.
Hence, PEG-based investing can turn out to be even more rewarding if some other relevant parameters are also taken into consideration.
Here are the screening criteria for a winning strategy:
PEG Ratio less than X Industry Median
(P/E Ratio (using F1) less than X Industry Median
(For more accurate valuation purpose.)
Zacks Rank of 1 (Strong Buy) 2 (Buy) 3 (Hold) (whether good market conditions or bad, stocks with a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) have a proven history of success.)
Market Capitalization greater than $1 Billion (This helps us to focus on companies that have strong liquidity)
Average 20 Day Volume greater than 50,000 (A substantial trading volume ensures that the stock is easily tradable.)
Percentage Change F1 Earnings Estimate Revisions (4 Weeks) greater than 5% (Upward estimate revisions add to the optimism, suggesting further bullishness.)
Value Score of less than or equal to B : Our research shows that stocks with a Style Score of ‘A’ or ‘B’ when combined with a Zacks Rank #1 #2 or #3 offer the best upside potential.
Here are five of the eight stocks that qualified the screening:
The Chemours Company (NYSE:(CC - Free Report) -Free Report) : This global chemistry company with leading market positions in titanium technologies, fluoroproducts and chemical solutions currently carries a Zacks Rank #1 and a Value Style Score ‘B’. The company also has an impressive expected five-year growth rate of 15.5%.
Rio Tinto plc (NYSE:(RIO - Free Report) -Free Report) : This popular name in the mining and metals market mines and produces aluminum products, copper, gold, silver, and molybdenum, nickel, and diamonds among others. The company can be an impressive value investment pick with its Zacks Rank #1 and Value Style Score ‘B’. Apart from a discounted PEG and P/E, the stock also has an impressive expected growth rate of 11.5% for the next fiscal.
POSCO (NYSE:(PKX - Free Report) -Free Report) : POSCO is a steel rolled products and plates provider in South Korea and internationally. It has a Value Style Score ‘A’ and an impressive growth rate of 23.5% for the next fiscal. It carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here .
Telenor ASA (OTCMKTS:(TELNY - Free Report) -Free Report) : This provider of telecommunication, data, and media communication services in the Nordics, Central and Eastern Europe, and Asia can also be an impressive value investment pick with its Zacks Rank #2 and Value Style Score ‘A.’
Western Refining, Inc. (NYSE: -Free Report) : This independent crude oil refining and marketing company holds a Zacks Rank #3 and a Value Style Score ‘A.’ The company delivered an earnings surprise of 41.2% in its last reported quarter.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.
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 .
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here https://at.zacks.com/?id=112
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.
Get the full Report on CC - FREE
Get the full Report on RIO - FREE
Get the full Report on PKX - FREE
Get the full Report on TELNY - FREE
Get the full Report on WNR - FREE
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer .
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.