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One of the best ways to find new stocks picks is by using Zacks Premium screening tools. Today, I am using the High Rank Value screen. This screen allows me to identify value stocks, which have low P/E and P/B ratios as well as high Zacks Ranks.
It is critically important that these stocks also have highs Zacks Ranks, because when looking for value stocks, with low P/E ratios, it can be very easy to fall into a value trap. A value trap is when a stock is trading at a low valuation, and investors mistake cheap, with value. Some stocks have cheap valuations because they are not great stocks, simple as that.
Fortunately, by filtering for stocks with high Zacks Ranks, we can ensure that we are buying stocks whose earnings expectations are trending higher. Knowing that analysts are raising expectations is a fantastic signal to investors that this is a stock has a strong chance of outperforming the market.
FedEx
FedEx (FDX - Free Report) is the leader in global express delivery services. The company, founded in 1971, provides a broad portfolio of transportation, e-commerce, and business services. The company operates under three primary divisions: FedEx Express (49% of total sales), FedEx Ground (35%), and FedEx Freight (10%).
FedEx Express offers delivery to 220 countries, employs approximately 249,000 permanent employees and has approximately 74,000 drop-off locations, 696 aircraft and approximately 86,000 vehicles across the globe.
FedEx Ground offers low-cost, same-day service to any business address in the U.S. and Canada, as well as residences in the U.S. And the FedEx Freight segment offers “less than truckload” freight services in the U.S.
FedEx currently has a Zacks Rank #2 (Buy), indicating upward trending earnings revisions.
With the slowdown in business that has been expected for months, and considering its importance to the e-commerce industry, it is no surprise that FDX has been projecting falling sales and earnings growth. However, more recently earnings expectations have been regularly revised higher over the last two months.
The current quarter earnings have been revised higher by 12% and current year earnings revised by 7%, with 82% of analysts upgrading their numbers.
Image Source: Zacks Investment Research
FDS is currently trading at a one-year forward earnings multiple of 15x, which is below the broad market of 19x and in line with its 15-year median of 15x.
FedEx also has a considerable cash position of nearly $6 billion which it is not afraid of using. During fiscal year 2022 management bought back $2.2 billion worth of shares and raised quarterly dividends by 53% to $1.15 per share.
Image Source: Zacks Investment Research
Marathon Petroleum
Marathon Petroleum (MPC - Free Report) is a U.S. based integrated, downstream energy company. MPC operates through two segments, Refining and Marketing and Pipeline Transportation. Marathon Petroleum’s Refining and Marketing unit operates 16 refineries with a crude processing capacity of 3 million barrels per day. In 2022 the refining business recorded $16.5 billion in profits. Pipeline transportation, operating as a partnership with Andeavor Logistics, transports oil products and manages logistics. It earned $4.5 billion in profits in 2022.
Additionally, in 2021, Marathon Petroleum sold its Speedway retail gasoline business for $21 billion to Japanese retail group Seven & I Holdings – owner of the 7-Eleven convenience store chain.
The deal also comes with a 15-year fuel supply agreement per which Marathon Petroleum will supply 7.7 billion gallons of gasoline per year to 7-Eleven, thus ensuring a steady revenue stream.
MPC stock has been extremely strong over the last two years. Returning nearly 150% over that time, it has outperformed the industry and market considerably. With the most recent news from OPEC+, where they agreed to cut daily oil production by over 1 million barrels per day, it is highly likely that MPC will see new highs soon.
Image Source: Zacks Investment Research
Marathon Petroleum currently has a Zacks Rank #2 (Buy), indicating an upward trend in earnings revisions. While sales are projected to fall across the board, earnings have been revised higher, nonetheless. For next quarter and the current year analysts have agreed unanimously in upgrading earnings expectations.
Image Source: Zacks Investment Research
MPC is trading at a one-year forward earnings multiple of 7x, which is just above the industry average of 6x, and well below its five-year median of 11x. Marathon Petroleum also offers a dividend yield of 2.4%, which it has boosted by an average of 12% annually over the last three years.
Image Source: Zacks Investment Research
Bottom Line
Value stocks can be an effective, albeit tricky strategy for investors to employ. By utilizing the Zacks Rank, investors can find a significant edge in picking the cheap stocks that are truly valuable. As they say, “price is what you pay, value is what you get,” and Zack will definitely help identify the real value.
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2 Strong Value Stocks Investors Can Buy Now
One of the best ways to find new stocks picks is by using Zacks Premium screening tools. Today, I am using the High Rank Value screen. This screen allows me to identify value stocks, which have low P/E and P/B ratios as well as high Zacks Ranks.
It is critically important that these stocks also have highs Zacks Ranks, because when looking for value stocks, with low P/E ratios, it can be very easy to fall into a value trap. A value trap is when a stock is trading at a low valuation, and investors mistake cheap, with value. Some stocks have cheap valuations because they are not great stocks, simple as that.
Fortunately, by filtering for stocks with high Zacks Ranks, we can ensure that we are buying stocks whose earnings expectations are trending higher. Knowing that analysts are raising expectations is a fantastic signal to investors that this is a stock has a strong chance of outperforming the market.
FedEx
FedEx (FDX - Free Report) is the leader in global express delivery services. The company, founded in 1971, provides a broad portfolio of transportation, e-commerce, and business services. The company operates under three primary divisions: FedEx Express (49% of total sales), FedEx Ground (35%), and FedEx Freight (10%).
FedEx Express offers delivery to 220 countries, employs approximately 249,000 permanent employees and has approximately 74,000 drop-off locations, 696 aircraft and approximately 86,000 vehicles across the globe.
FedEx Ground offers low-cost, same-day service to any business address in the U.S. and Canada, as well as residences in the U.S. And the FedEx Freight segment offers “less than truckload” freight services in the U.S.
FedEx currently has a Zacks Rank #2 (Buy), indicating upward trending earnings revisions.
With the slowdown in business that has been expected for months, and considering its importance to the e-commerce industry, it is no surprise that FDX has been projecting falling sales and earnings growth. However, more recently earnings expectations have been regularly revised higher over the last two months.
The current quarter earnings have been revised higher by 12% and current year earnings revised by 7%, with 82% of analysts upgrading their numbers.
Image Source: Zacks Investment Research
FDS is currently trading at a one-year forward earnings multiple of 15x, which is below the broad market of 19x and in line with its 15-year median of 15x.
FedEx also has a considerable cash position of nearly $6 billion which it is not afraid of using. During fiscal year 2022 management bought back $2.2 billion worth of shares and raised quarterly dividends by 53% to $1.15 per share.
Image Source: Zacks Investment Research
Marathon Petroleum
Marathon Petroleum (MPC - Free Report) is a U.S. based integrated, downstream energy company. MPC operates through two segments, Refining and Marketing and Pipeline Transportation. Marathon Petroleum’s Refining and Marketing unit operates 16 refineries with a crude processing capacity of 3 million barrels per day. In 2022 the refining business recorded $16.5 billion in profits. Pipeline transportation, operating as a partnership with Andeavor Logistics, transports oil products and manages logistics. It earned $4.5 billion in profits in 2022.
Additionally, in 2021, Marathon Petroleum sold its Speedway retail gasoline business for $21 billion to Japanese retail group Seven & I Holdings – owner of the 7-Eleven convenience store chain.
The deal also comes with a 15-year fuel supply agreement per which Marathon Petroleum will supply 7.7 billion gallons of gasoline per year to 7-Eleven, thus ensuring a steady revenue stream.
MPC stock has been extremely strong over the last two years. Returning nearly 150% over that time, it has outperformed the industry and market considerably. With the most recent news from OPEC+, where they agreed to cut daily oil production by over 1 million barrels per day, it is highly likely that MPC will see new highs soon.
Image Source: Zacks Investment Research
Marathon Petroleum currently has a Zacks Rank #2 (Buy), indicating an upward trend in earnings revisions. While sales are projected to fall across the board, earnings have been revised higher, nonetheless. For next quarter and the current year analysts have agreed unanimously in upgrading earnings expectations.
Image Source: Zacks Investment Research
MPC is trading at a one-year forward earnings multiple of 7x, which is just above the industry average of 6x, and well below its five-year median of 11x. Marathon Petroleum also offers a dividend yield of 2.4%, which it has boosted by an average of 12% annually over the last three years.
Image Source: Zacks Investment Research
Bottom Line
Value stocks can be an effective, albeit tricky strategy for investors to employ. By utilizing the Zacks Rank, investors can find a significant edge in picking the cheap stocks that are truly valuable. As they say, “price is what you pay, value is what you get,” and Zack will definitely help identify the real value.