- (1:00) - Finding Stocks With Growth and Value
- (5:10) - Benjamin Grahams Hot Takes On Growth: Long Term Investing
- (13:50) - Tracey’s Top Stock Picks
- (27:30) - Episode Roundup: ABG, GPI, LAD, CRMT, COG, ANF, ECHO
- Podcast@Zacks.com
Welcome to Episode #246 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.
What if you could be a value investor and still buy growth stocks?
Ben Graham (NYSE:GHM), the father of value investing, wasn’t a fan of growth stocks unless he could get them cheap.
He used the PEG ratio to find cheap stocks with growth.
The PEG ratio is the price/earnings to growth ratio. Forget about calculating it yourself.
You can now find it on financial websites, including Zacks.com.
Screening for Cheap Growth Stocks Using the PEG Ratio
A PEG ratio under 1.0 usually indicates a company is cheap but has growth.
If you add the Zacks Ranks of #1 (Strong Buy) and #2 (Buy) to your screen, you should hopefully get stocks where analysts are raising their earnings estimates.
But what if you want to narrow it even more than this basic screen?
Adding a 5-year historical earnings growth rate over 20%, which is an aggressive growth rate, still gives you 18 total stocks.
5 Cheap Growth Stocks with Top Rank
1. Asbury (NYSE:ABG) Automotive ABG is an auto retailer with a PEG ratio of just 0.47. Earnings are expected to grow 76% this year.
2. Group 1 Automotive (NYSE:GPI) GPI is another auto retailer that is also cheap. It has a PEG ratio of 0.7 and a P/E of 6. Earnings are expected to rise 54% this year.
3. Lithia Motors (NYSE:LAD) LAD operates as an auto retailer both in physical stores and online. Lithia and Driveway are expected to grow earnings by 63% in 2021. It has a PEG ratio of just 0.6.
4. America’s CarMart CRMT is another auto retailer with value credentials. It has a PEG ratio of 0.57 and a forward P/E of 11.
5. Cabot (NYSE:CBT) Oil & Gas COG is a natural gas producer with a PEG ratio of only 0.17. Revenue is expected to skyrocket 220% in 2021 and another 8.7% in 2022. It pays a dividend, currently yielding 2.7%.
There are two more intriguing cheap growth stocks you may want to know about that made the screen.
Find out what they are on this week’s podcast.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix (NASDAQ:NFLX) did to Blockbuster and Amazon (NASDAQ:AMZN) did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Cabot Oil & Gas Corporation (COG): Free Stock Analysis Report
Group 1 Automotive, Inc. (GPI): Free Stock Analysis Report
Asbury Automotive Group, Inc. (ABG): Free Stock Analysis Report
Lithia Motors, Inc. (LAD): Free Stock Analysis Report
Americas CarMart, Inc. (CRMT): Free Stock Analysis Report
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Zacks Investment Research