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 - Free Report)
Prior Close: $8.72
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/E ratio of 14.53, a P/B ratio of 1.17, and a P/S ratio of 0.93. Its earnings yield of 6.85% comes in well above the industry average of 1.64%. Overall, Hallador has a VGM score of “A” and falls into the top 8% of the Zacks Industry Rank.
2. Israel Chemicals Ltd. (ICL - Free Report)
Prior Close: $3.70
Israel Chemicals is a manufacturer of specialty fertilizers, phosphates, flame retardants, and water treatment solutions. ICL current has a P/E ratio of 11.04, a P/B ratio of 1.48, and a P/S ratio of 0.88. The company’s earnings yield of 9.14% is nearly double that of the industry average, and the company comes in with an overall VGM score of “A.” Israel Chemicals is expected to report its earnings on November 10, and it will hope to build on last quarter’s earnings beat of 66.67%.
3. Tilly’s, Inc. (TLYS - Free Report)
Prior Close: $9.68
Tilly’s is a specialty retailer in the action sports industry that designs and sells men’s and women’s clothes. While the company’s P/E ratio of 36.53 is weak in comparison to its industry, its P/S ratio of 0.49 comes in well above average. The company’s P/B ratio of 1.58 also remains strong. Tilly’s also has an “A” grade for Growth and an overall VGM score of “A.”
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.
Stocks that Aren't in the News. Yet.
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