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How to Find the Best Value Stock Screens for 2026

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Key Takeaways

  • Avoid value only stock screens for 2026. They will return many value traps.
  • The Zacks Screen Small Caps with Big Growth looks for value stocks with earnings growth of over 20%
  • Vestis, Inogen and Redwood Trust are each Zacks Rank #2 (Buy) stocks with double digit earnings growth.

  • (0:30) - How To  Find The Best Value Stocks For Your Portfolio
  • (11:20) - Tracey’s Top Stock Picks: Small Cap Stock Screener
  • (29:25) - Episode Roundup: VSTS, INGN, RWT
  •                 Podcast@Zacks.com

 

Welcome to Episode #425 of the Value Investor Podcast.

Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.

In 2025, there were plenty of value stocks as tariffs and the consumer spending uncertainty has hit many companies. Those are stocks with low price-to-earnings (P/E) ratios or other low valuations in price-to-sales (P/S) or price-to-book (P/B) ratios.

But low valuations don’t always mean a stock is a quality value. Declining earnings estimates for 2026 can indicate the stock is a value trap. It looks cheap but growth is heading the wrong way.

Value investors shouldn’t settle in their stocks. Some stocks really ARE cheap for a reason and it’s because business isn’t good.

Screening for Value Stocks for 2026

But how do value investors find top quality value stocks?

There are 8 premium value stock screens on Zacks.com and 3 basic free stock screens that investors can run. That’s 11 screens that look for value.

But many of them only look for cheapness. They don’t also look for growth. The screen “High Rank Value”, for example, which looks for low P/E and P/B ratios, delivered 127 stocks. But because it used the P/B ratio as a representation of value it returned dozens of small regional and community banks, all of which have low P/B ratios right now.

The small banks are values, and not traps, but for the purposes of this podcast, Tracey was looking for companies that were not banks. She has covered the small banks on prior Value Investor podcasts.

Screening for Small Cap Stocks with Growth

Zacks.com has a premium screen called “Small Caps with Big Growth” that you wouldn’t know from the title actually includes small cap value stocks.

For value, it looks for a P/S ratio under 1.0. A P/S ratio under 1.0 means you are buying the sales for less what the sales are worth. A P/S ratio of 0.7 means you are paying $0.70 for every $1.00 of sales.

That’s a bargain.

It also screens for companies with at least 20% earnings growth this year.

For small caps, the screen included stocks with a market cap of $1 billion or less. And it screens for Zacks Ranks of #1 (Strong Buy) or #2 (Buy) which are the top Zacks Ranks.

This screen returned 17 stocks.

3 Small Cap Value Stocks with Big Growth

1. Vestis Corp. (VSTS - Free Report)

Vestis Corp. provides uniforms and workplace supplies. It has a market cap of $909 million. Vestis is in the middle of a multi-year transformation which will increase profitability and cash flow.

On Dec 1, 2025, Vestis reported its fourth quarter 2025 results. It has a plan for cost savings of $75 million by the end of fiscal 2026.

The Zacks Consensus is looking for earnings growth of 48% in fiscal 2026 after a decline in fiscal 2025. Shares have plunged 53% year-to-date. It’s cheap, with a P/S ratio of just 0.33.

Should a small cap turnaround like Vestis be on your short list for 2026?

2. Inogen, Inc. (INGN - Free Report)

Inogen is a global technology company that makes respiratory products for use in the homecare setting. In its third quarter 2025 results, Inogen saw a 7th consecutive quarter of mid-single digit revenue growth.

Shares are down 27% year-to-date and have traded in a narrow trading range for several years. Earnings remain in the negative but are expected to move in the right direction this year and next. Inogen lost $1.52 per share in 2024, and the Zacks Consensus is looking for a loss of $0.90 in 2025 and a loss of $0.56 in 2026.

But estimates have been revised higher in the last 60 days. Earnings are expected to rise 40.7% in 2025 and another 37% in 2026. Inogen is a Zacks Rank #2 (Buy) stock.

Inogen is cheap with a P/S ratio of just 0.53.

Should value investors take a chance on Inogen in 2026?

3. Redwood Trust, Inc. (RWT - Free Report)

Redwood Trust purchases mortgages from lenders which allows them to recycle their capital and make new loans. It has a 30-year track record of providing liquidity to the housing markets in segments not well served by government programs. Redwood Trust has a market cap of $713 million.

Shares of Redwood Trust are down 11.5% year-to-date. It’s expected to grow earnings by 52% in 2025 and another 17.7% in 2026. Redwood Trust has a low P/S ratio of just 0.64 but it also has a low forward P/E of just 7.1. A P/E under 10 means a company is dirt cheap.

Redwood Trust pays a dividend and recently announced its 106th consecutive quarterly dividend. It is paying $0.18 per share this quarter. That’s currently an incredible yield of 12.4%.

Redwood Trust is a Zacks Rank #2 (Buy) stock.

Should value investors consider companies in the mortgage industry like Redwood Trust in 2026?

What Else Should You Know About Finding Top Value Screens for 2026?

Tune into this week’s podcast to find out.

 


See More Zacks Research for These Tickers


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Redwood Trust, Inc. (RWT) - free report >>

Inogen, Inc (INGN) - free report >>

Vestis Corporation (VSTS) - free report >>

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