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4 Value Stocks for Growth Investors to Enrich Portfolio

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Investors got the much-needed confidence with the current year showing improvement across various aspects like the noteworthy tax reform, improving economy and rising interest rates to name a few. Banking on these positives, we expect investors to witness a bullish market in 2018.

We will discuss some of the above-mentioned factors in detail to help shed light on how these are likely to support the current momentum in the markets.

The gradually improving interest rates have come as a blessing for investors with the Fed indicating four rate hikes this year, thereby lending an impression of aggressive rate raises.

The FOMC (Federal Open Market Committee) meeting held on May 2, 2018 did not witness any rate hike with the regulatory body members unanimously deciding not to increase the rates post the March conference. However, this month’s assembly buoyed hope among investors as the Fed officials remain on track to augment rates at their June meeting. The current interest rate ranges between 1.50% and 1.75%.

This apart, inflation has finally reached the Fed’s 2% target after unable to achieve the same for the past six years.

Also, the unemployment rate is projected at 3.8% in 2018 while the gross domestic product is likely to grow 2.7% (an increase from the earlier estimate of 2.5%). Further, rise in household spending as well as ramped up business activities are expected to drive growth in 2018. The tax cut, which reduced the tax rate to 21% from 35%, is anticipated to help attain an economic boom, higher job opportunities as well as a spike in inflation rate.

All aforementioned factors represent a bullish economic outlook, further picking pace in the recent months.

At this point of time, when the economy is on a rebound, it seems prudent to invest in reasonably priced stocks, by current trading standards. Keeping this in mind, putting money on value stocks looks wiser as stocks trade at a lower price regardless of what the performance of the companies might indicate. On the flip side, growth investors usually incline toward stocks with above-average earnings growth rate than the market. These stocks are mostly overvalued and are bet on to generate substantial capital gains.

Value investment is for those investors looking to buy stocks with price lower than the intrinsic one. Whereas, growth investors focus on stocks with solid earnings growth prospect.

However, it is a difficult task for investors to zero in on the stocks with great value coupled with growth prospects.

Screening Parameters

In order to aid investors in identifying some ideal investment choices, we have applied the Zacks Stock Screener.

We have shortlisted stocks with a favorable Value Score of A or B as well as an impressive Growth Score of A or B and stocks with a solid Zacks Rank #1 (Strong Buy) or 2 (Buy). Back tested results have shown that stocks with a favorable Style Score of A or B coupled with a bullish Zacks Rank offer best investment options. You can see the complete list of today’s Zacks #1 Rank stocks here.

These stocks have also outperformed the respective industries year to date and witnessed northward earnings estimate revisions for both 2018 and 2019.

Key Picks

Check the following four stocks, which met all the aforesaid criteria:

Frisco, TX-based Addus HomeCare Corporation (ADUS - Free Report) provides personal care services to elderly, chronically ill and disabled persons plus individuals at risk of hospitalization or institutionalization in the United States. The stock has seen the Zacks Consensus Estimate for current-year earnings being revised 11.1% upward to $2.21 and moved 17.4% north to $2.63 for 2019 over the last 60 days. This upbeat stance is evident from the company’s Zacks Rank #2.  

The stock with a Value Score of B and a Growth Score of A has soared 64.8% compared with the industry’s increase of 8.0%.


 

 

Mayfield Village, OH-based The Progressive Corporation (PGR - Free Report) provides personal and commercial auto insurance, residential property insurance and other specialty property-casualty insurance as well as related services, primarily in the United States. The stock has seen the Zacks Consensus Estimate for current-year earnings being raised 8.2% to $4.07 and moved 6.9% up to $4.15 for 2019 over the last 60 days. This northbound estimate revision is indicative of the company’s Zacks Rank of 2.

The stock has a Value Score of B and a Growth Score of A. It has rallied 11.9% against the industry’s decrease of 1.6%.


 

 

Headquartered at Lake Zurich, IL, ACCO Brands Corporation (ACCO - Free Report) designs, manufactures and markets consumer and business products. The stock has seen the consensus mark for current-year earnings being inched up 0.7% to $1.36 and increased 1.4% to $1.47 for 2019 over the last 60 days. The stock is a Zacks #2 Ranked player.

The stock with an encouraging Value Score of A and a Growth Score of B has gained 8.2% versus the industry’s decline of 5%.  


 

Based in Chicago, IL, Enova International, Inc. (ENVA - Free Report) provides online financial services. The stock has seen the consensus estimate for current-year earnings being revised 12.9% upward to $2.27 and moved 9.3% up to $2.70 for 2019 over the last 60 days. This is reflective of the company’s Zacks Rank of 1.

The stock boasts a Value Score of B and a Growth Score of A. It has skyrocketed 116.1% against the industry’s fall of 6.8%.

 

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