- (0:30) - The Basics of Value Investing: Best Classic Value Stocks
- (3:40) - Stock Screener Criteria: How To Find The Right Picks
- (8:05) - Tracey’s Top Stock Picks
- (25:15) - Are Some Of These Companies Being Ignored By Wall Street?
- (28:30) - Episode Roundup: RE, GM, KBH, MDC, MFC, NMRK, ODP, SANM, WRK
- Podcast@Zacks.com
Welcome to Episode #218 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.
2020 was a red-hot year for all stock investors, including value investors.
But after the major stock indexes hit record highs to finish the year, it has left many wondering, is there any value left at all?
Screening for Classic Value
Zacks has a premium screen that looks for classic value components along with the top Zacks Ranks of #1 (Strong Buy) and #2 (Buy).
Those value components are numerous which really narrows this screen.
It includes a P/S ratio under 1, a P/B ratio under 2, a forward P/E under 20, a P/Cash Flow less than 20, and a PEG less than 1.
In order not to get penny stocks, the stock must have last closed over $5.
It also must have an average trading volume greater than 100,000.
To narrow it even further, the company must have a Zacks Style Score for value of A or B, the two top scores.
This screen produced just 9 stocks.
5 Top Classic Value Stocks to Start 2021
1. Everest Re (NYSE:RE) Group RE is an international insurance and reinsurance company. In the third quarter, Everest said it was an underwriter’s market. Shares have fallen 18.4% over the last year. It’s still cheap with a forward P/E of 9.2. It also pays a dividend, yielding 2.7%.
2. KB Home (NYSE:KBH) KBH is a national home builder with projects in 42 markets in 8 states. Earnings are expected to soar 47.6% in fiscal 2021. It’s a true value stock with a forward P/E of just 7.6. Shares have fallen 6.9% over the last year.
3. Manulife Financial (NYSE:MFC) MFC is a large cap Canadian financial services company which does insurance and wealth management. It owns John Hancock. Shares are dirt cheap, with a forward P/E of just 7.7. It also pays a juicy dividend, yielding 4.9%. Shares are down 12.2% over the last year.
4. The ODP Corporation ODP is a specialty retailer which owns Office Depot (NASDAQ:ODP) and Office Max. Earnings are expected to rise 11% in 2020 and another 25.5% in 2021. Shares have been spiking higher to start 2021, and are now up 33% over the last year. But they remain dirt cheap, with a forward P/E of 5.6.
5. Sanmina Corporation SANM is an integrated manufacturing solutions company in Silicon Valley. It has beat the Zacks Consensus Estimate by big margins two quarters in a row. While shares are down just 5% over the last year, it’s still trading with a forward P/E of 9.4.
In addition, there are 4 other value stocks that also made the screen.
Find out what they are, and everything else you need to know about classic value, on this week’s podcast.
[In full disclosure, Tracey owns shares of MDC mentioned on the podcast in her personal portfolio.]
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Manulife Financial Corp (MFC): Free Stock Analysis Report
Everest Re Group, Ltd. (RE): Free Stock Analysis Report
The ODP Corporation (ODP): Free Stock Analysis Report
KB Home (KBH): Free Stock Analysis Report
Sanmina Corporation (SANM): Free Stock Analysis Report
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