Welcome to Episode #61 of the Value Investor Podcast
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio service, shares some of her top value investing tips and stock picks.
This week, some well-known companies have reported earnings including Micron and Nike. While all the attention was on them, others reported with little fanfare, including uniform-maker Cintas (CTAS - Free Report) .
Only about 500 people “follow” Cintas on the stock social media board Stocktwits versus thousands that follow Nike and Micron.
But after posting another solid quarter, the shares went on to hit another 5-year high. Over that time, shares are up 230% versus just 70% for the S&P 500.
Yet, Cintas is mostly ignored by Wall Street and most investors.
That’s what has been happening to value stocks over the last several years. They have been relegated to the side with all the attention going to the high growth names.
But that doesn’t mean there aren’t opportunities out there for savvy value investors.
Screening for Value Stocks Under $20
Tracey ran a screen using the price-to-sales ratio instead of the P/E. She searched for P/S ratios under 1.0, which indicate a company is undervalued. She added on a Zacks Rank of #1 (Strong Buy) or #2 (Buy) and, for fun, she threw in stocks under $20.
Surprisingly, even though the $20 price made the screen very restrictive, it still gave her 8 stocks.
Here are the 3 best cheap, by price, and cheap, by value fundamentals, stocks from that screen.
3 Ultra Cheap Value Stocks
1. Travelport Worldwide (TVPT - Free Report) provides tech, mobile and payment solutions through its travel commerce platform to the global travel industry. It’s UK-based and has a P/S ratio of just 0.8. What should you know about earnings and sales growth?
2. Sally Beauty (SBH - Free Report) has a price-to-sales ratio of just 0.66. The insiders have been buying shares over the summer, with both the CEO and a director jumping in. Is this company a cheap hidden gem?
3. Party City (PRTY - Free Report) has a P/S ratio of 0.7. Earnings are expected to grow by the double digits this year. Are shares being lumped in with all the other retailers?
Remember to always research the fundamentals for any company you buy. Tracey just did a basic screen for value fundamentals. It doesn’t tell you the whole picture.
What else should you know about these ultra-cheap value stocks?
Tune into this week’s podcast to find out.
Want more value investing insights from Tracey?
Value investors are a special breed of investor. They don’t follow the herd.
If that is your style of investing, be sure to check out Tracey’s weekly Value Investor service to receive more in-depth analysis on value companies and see which stocks she thinks are the best bargains now.
The Value Investor portfolio holds between 20 and 25 value stocks for the long haul.
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