The stock market continued its push into historic levels today as the DJIA closed up over 78 points and the S&P 500 closed up 0.49%. The uptick marked the fourth straight week of gains for the S&P 500. Consumer spending in the third quarter was revised higher to 3.2% from its previous reading of 2.9% as consumers continue to anchor the US economy.
This historic economic expansion has rapidly inflated the valuation of stocks. Navigating the stock market looking for a good entry point during a bull run can be a daunting task. So, lets take a look at a few stocks that trade at a more buyer friendly forward multiple.
Dick’s Sporting Goods DKS has been able to bounce back from the initial backlash it faced when the company elected to ban the sales of weapons. Wall Street wasn’t sure how Dick’s was going to be able pull it off as it halted the sale of the most popular type of rifle in the country. Dick's reported net sales growth of 5.6% to $1.96 billion in its third quarter on a 6% surge in comparable-store sales. On the earnings front, the retailer saw its bottom-line jump over 33% to $0.52 per share.
The company currently trades at about 12.6X its forward earnings, which is just below the industry average of 13.1X forward earnings. This could prove as an opportune time to pick up DKS stock before its valuation elevates above its industry average.
Our Q4 consensus estimates call for earnings to rise over 13% to $1.21 per share and for net revenue to grow 2.8% to $2.56 billion. DKS shares have risen a whopping 51% in 2019 easily outpacing the S&P 500’s 26% run. Dick’s also pays out a quarterly dividend with a 2.32% yield that can add to the stock’s already substantial returns. DKS sits at a Zacks Rank #1 (Strong Buy).
Intel INTC is one of the biggest players in the semiconductor space with its market cap of over $252 billion. Intel shares have climbed about 25% in 2019 as the company’s CEO, Bob Swan, has focused on boosting returns. More investment is being directed toward Intel’s bread-and-butter business chip innovation including the eventual move to 7-nanometer chips, as well as 5-nanometer chips.
Intel is also making strides in other areas like 5G base station systems, self-driving cars, and artificial intelligence applications. INTC stock trades at 12.5X its forward earnings, which is well below the industry average of 24.6X forward earnings.
Intel also pays out a quarterly dividend with a 2.17% yield that can add to the value of owning INTC stock. Our Q1 estimates forecast Intel to kick off its fiscal year with some momentum as our estimates call for a top-line gain of 7.31% and a bottom-line increase of 18%. Earning estimates have been revised higher for Intel, helping earn the semiconductor a Zacks Rank #2 (Buy).
Lithia Motors ( LAD Quick Quote LAD - Free Report) is one of the leading automotive retailers of new and used vehicles, and related services in the United States. At the end of its fiscal 2018, the company offered 28 vehicle brands across 181 stores in 18 states of the United States. The automobile retailer is coming off a third quarter where it reported the highest adjusted Q3 earnings in company history at $3.39 per share, which was a Y/Y gain of 20%. The firm also posted record revenues of $3.3 billion, which represented an 8% increase from the year ago quarter.
Lithia Motors’ shares have more than doubled in 2019 as they are up over a whopping 107%. Despite the substantial gains it has made YTD, its shares currently trade at around 12X its forward earnings, which is below the S&P 500’s average of 18.5X forward earnings.
Our fiscal 2019 estimates call for earnings to grow 18.5% to $11.83 per share and for net revenue to increase 6.87% to $12.6 billion. The projected growth in sales would be below the 17% growth seen in fiscal 2018 but the projected bump in earnings would outpace the 11% jump in 2018. Lithia is a stock that looks poised to carry its momentum in 2020 and currently rests at a Zacks Rank #1 (Strong Buy).
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