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Welcome to Episode #186 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.
It should be easy to be a value investor in 2020, right?
But it’s not.
With companies withdrawing guidance, and revenue and earnings expected to fall sharply at many companies in 2020, how does a value investor figure out if a company is genuinely cheap?
With earnings on the decline, it feels like the entire S&P 500 might just be one big value trap.
Screening for Cheap Zacks Strong Buy Stocks
Zacks Rank #1 (Strong Buy) stocks are ranked that high because they are supposed to have rising earnings estimates.
Right now, many companies have just the opposite, or earnings that are expected to decline dramatically.
Why not screen for Zacks Strong Buy stocks that are also cheap to see if there are some genuine values there?
Running a basic screen with a forward P/E under 15 and the Zacks Rank of #1 (Strong Buy), returns 17 stocks.
Here are 3 of them.
3 Cheap Zacks Strong Buy Stocks
1. Avid Technology, Inc. is a small cap software company in the media, television and film industries. It recently reported record growth in paid subscriptions for its cloud-enabled software in the first quarter. But with film and television shows shut down, it’s getting hurt on sales in those categories. It’s trading with a forward P/E of 7.1 but will those earnings estimates hold up?
2. Cardinal Health, Inc. (CAH - Free Report) is supplying PPE to hospitals, labs, pharmacies and other healthcare facilities. Not surprisingly, the shares are only down 2% year-to-date. But it’s still cheap, with a forward P/E of 9.4.
3. EMCOR Group, Inc. (EME - Free Report) is in mechanical and electrical construction, industrial energy infrastructure and facilities services. It is paying its regular dividend this month, in April, which is yielding 0.5%. Shares are down 30.9% year-to-date and are trading at just 10.4x.
Investors might want to watch companies that are involved in the PPE industry, other than Cardinal Health.
Fastenal (FAST - Free Report) already reported earnings. It’s a Zacks Rank #4 (Sell) currently, but the safety business, which includes PPE, was up 31% in the month of March. It’s not cheap, however, as it’s trading with a forward P/E of 27.
Additionally, some investors might want to wait on the sidelines with individual stocks while the earnings picture clears up.
You don’t have to get fancy about it. Investors can just buy a broad market index, like the Vanguard S&P 500 ETF (VOO - Free Report) .
What else do you need to know about finding value stocks while earnings remain volatile?
Listen to this week’s podcast to find out.
[In full disclosure, Tracey owns shares of VOO in her personal portfolio.]
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
Image: Bigstock
How to Find Value Stocks During the Coronavirus Crisis
Welcome to Episode #186 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.
It should be easy to be a value investor in 2020, right?
But it’s not.
With companies withdrawing guidance, and revenue and earnings expected to fall sharply at many companies in 2020, how does a value investor figure out if a company is genuinely cheap?
With earnings on the decline, it feels like the entire S&P 500 might just be one big value trap.
Screening for Cheap Zacks Strong Buy Stocks
Zacks Rank #1 (Strong Buy) stocks are ranked that high because they are supposed to have rising earnings estimates.
Right now, many companies have just the opposite, or earnings that are expected to decline dramatically.
Why not screen for Zacks Strong Buy stocks that are also cheap to see if there are some genuine values there?
Running a basic screen with a forward P/E under 15 and the Zacks Rank of #1 (Strong Buy), returns 17 stocks.
Here are 3 of them.
3 Cheap Zacks Strong Buy Stocks
1. Avid Technology, Inc. is a small cap software company in the media, television and film industries. It recently reported record growth in paid subscriptions for its cloud-enabled software in the first quarter. But with film and television shows shut down, it’s getting hurt on sales in those categories. It’s trading with a forward P/E of 7.1 but will those earnings estimates hold up?
2. Cardinal Health, Inc. (CAH - Free Report) is supplying PPE to hospitals, labs, pharmacies and other healthcare facilities. Not surprisingly, the shares are only down 2% year-to-date. But it’s still cheap, with a forward P/E of 9.4.
3. EMCOR Group, Inc. (EME - Free Report) is in mechanical and electrical construction, industrial energy infrastructure and facilities services. It is paying its regular dividend this month, in April, which is yielding 0.5%. Shares are down 30.9% year-to-date and are trading at just 10.4x.
Investors might want to watch companies that are involved in the PPE industry, other than Cardinal Health.
Fastenal (FAST - Free Report) already reported earnings. It’s a Zacks Rank #4 (Sell) currently, but the safety business, which includes PPE, was up 31% in the month of March. It’s not cheap, however, as it’s trading with a forward P/E of 27.
Additionally, some investors might want to wait on the sidelines with individual stocks while the earnings picture clears up.
You don’t have to get fancy about it. Investors can just buy a broad market index, like the Vanguard S&P 500 ETF (VOO - Free Report) .
What else do you need to know about finding value stocks while earnings remain volatile?
Listen to this week’s podcast to find out.
[In full disclosure, Tracey owns shares of VOO in her personal portfolio.]
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>