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How to Screen for Stocks on Sale

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  • (0:15) - Tracey’s Private Room On Stock Twits
  • (1:45) - Volatile Market and Major Pull Backs
  • (8:00) - Oversold Value Stock Screener
  • (12:40) - Tracey’s Top Stock Picks: AMTD, ETFC, ABG, SAVE, RH
  • (20:00) - Takeaways On The Oversold Stocks

Welcome to Episode #120 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.

The major stock indexes had another big single day drop on Dec 4 with the Dow Industrials falling over 3%.

But if you thought that was the largest drop of the year, you’d be wrong.

That was the fourth single session where the Dow lost more than 3% in 2018. The other three days were Oct 10, when it was down 3.1%, Feb 5, when it lost 4.6% and Feb 8 when it was down 4.2%.

Yet, most investors probably don’t remember the other three days when there was a lot of pain in the portfolio.

Over the longer term, the volatility tends to get smoothed out.

However, with these big single day plunges, some stocks do go on sale. But how do investors find them?

Screening for Stocks on Sale

Sometimes you have to run several screens before finding what you’re looking for.

Tracey first ran a Zacks Predefined screen from on oversold stocks. It was geared more towards the “oversold” part and didn’t give her the focus on fundamentals.

It returned 34 stocks.

Bed Bath & Beyond (BBBY - Free Report) and Snap Inc (SNAP - Free Report) were both results of that screen. Bed, Bath & Beyond is down 32% over the last past 3 months while Snap has plunged 41%.

But Snap still doesn’t have a P/E and Bed Bath & Beyond has been a value trap in 2018.

Starting over, Tracey screened for value stocks expecting to see some that had sold off but she would then also get the value fundamentals she sought.

This screen, which included forward and trailing P/Es, the Zacks Rank of #1 (Strong Buy) and #2 (Buy) , a Zacks Style Score for Value of A or B, the two top categories, and a Zacks Industry Rank in the top 50%.

It returned 36 stocks.

Here are three of the results.

Are These Value Stocks on Sale?

1.       E*TRADE Financial (ETFC - Free Report) is down 18% over the last past 3 months so it’s gone on “sale” at least in terms of its share price. In that same time period, the S&P 500 declined 6.8%.

2.       RH (RH - Free Report) is down 9.4% over the prior 3 months so it is on sale compared to the S&P 500 but not by a lot. It also sports a forward P/E of 16 looking at 2019 projected earnings. That’s cheaper than the stock has been in the past. Is it on “sale”?

3.       Spirit Airlines (SAVE - Free Report) is one of the few stocks in the screen that still has a value P/E of 15 but the shares are going the other direction, up. Shares have jumped 31% over the past 3 months as crude has plunged.

Is this the worst of the recent stock weakness or is more to come?

Should you hold out for an even bigger sale in stocks?

Find out the answer to these questions, and more, on this week’s podcast.

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