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Zacks Value Trader Highlights: Meritage Homes, Graphic Packaging, Owens & Minor, Superior Group of Companies and Whirlpool
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For Immediate Release
Chicago, IL – August 14, 2020 – Zacks Value Trader is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here:
Using the P/S Ratio to Find Cheap Stocks
Welcome to Episode #201 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.
We’re in August, the dog days of summer. Earnings season is quickly winding down.
The S&P 500 is near all-time highs again, but with earnings on the decline that means it is trading with an average forward P/E of 26. That’s really expensive.
Where can you find cheap stocks right now?
Instead of looking at the earnings, investors should look at sales.
What’s a Value P/S Ratio?
Value investors can use the price-to-sales ratio to find cheap stocks. If you screen for a P/S ratio under 1.0, that means that you are paying less for the sales.
For example, a P/S ratio of 0.5, means you are paying 50 cents for each dollar of sales. That’s a deal, right?
Screening Using the P/S Ratio
Just running a screen using a P/S ratio under 1.0 would be too broad but if you add the Zacks Ranks of #1 (Strong Buy) and #2 (Buy), you then should get a narrower screen.
However, this screen still returned 241 companies. That’s far too many.
Adding some other classic value fundamentals like the P/B ratio and PEG ratio finally brings the screen down to a workable 19 companies.
5 Companies with Cheap P/S Ratios
1.Meritage Homes Corporation (MTH - Free Report) was the only homebuilder that made the screen even though many of them are cheap right now. It has a P/S ratio of just 0.95 even thought shares have soared 62% year-to-date.
2.Graphic Packaging Holding Company (GPK - Free Report) is a paper-based consumer packaging company for the food, beverage and foodservice industry. It never suspended its dividend, which currently yields 2%. It’s dirt cheap with a P/S ratio of 0.7.
3.Owens & Minor, Inc. (OMI - Free Report) makes medical protective equipment, or PPP, and during the pandemic this has been one of the hottest products. Shares are up 209% year-to-date but they still have a P/S ratio of just 0.1.
4.Superior Group of Companies, Inc. (SGC - Free Report) is a small cap company that makes uniforms, does custom business branding and operates The Office Gurus. In the second quarter, net sales were up 73%. Not only is this 100-year old company paying its dividend, it announced a special dividend. It’s still a value, with a price-to-sales ratio of 0.7.
5.Whirlpool Corporation (WHR - Free Report) saw a significant recovery across all its markets in June. This appliance maker is still paying a dividend, which is currently yielding 2.7%. How cheap is it? It’s trading with a P/S ratio of just 0.6.
What else do you need to know about the P/S ratio and value stocks?
Tune into this week’s episode to find out.
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.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks Value Trader Highlights: Meritage Homes, Graphic Packaging, Owens & Minor, Superior Group of Companies and Whirlpool
For Immediate Release
Chicago, IL – August 14, 2020 – Zacks Value Trader is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here:
Using the P/S Ratio to Find Cheap Stocks
Welcome to Episode #201 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.
We’re in August, the dog days of summer. Earnings season is quickly winding down.
The S&P 500 is near all-time highs again, but with earnings on the decline that means it is trading with an average forward P/E of 26. That’s really expensive.
Where can you find cheap stocks right now?
Instead of looking at the earnings, investors should look at sales.
What’s a Value P/S Ratio?
Value investors can use the price-to-sales ratio to find cheap stocks. If you screen for a P/S ratio under 1.0, that means that you are paying less for the sales.
For example, a P/S ratio of 0.5, means you are paying 50 cents for each dollar of sales. That’s a deal, right?
Screening Using the P/S Ratio
Just running a screen using a P/S ratio under 1.0 would be too broad but if you add the Zacks Ranks of #1 (Strong Buy) and #2 (Buy), you then should get a narrower screen.
However, this screen still returned 241 companies. That’s far too many.
Adding some other classic value fundamentals like the P/B ratio and PEG ratio finally brings the screen down to a workable 19 companies.
5 Companies with Cheap P/S Ratios
1.Meritage Homes Corporation (MTH - Free Report) was the only homebuilder that made the screen even though many of them are cheap right now. It has a P/S ratio of just 0.95 even thought shares have soared 62% year-to-date.
2.Graphic Packaging Holding Company (GPK - Free Report) is a paper-based consumer packaging company for the food, beverage and foodservice industry. It never suspended its dividend, which currently yields 2%. It’s dirt cheap with a P/S ratio of 0.7.
3.Owens & Minor, Inc. (OMI - Free Report) makes medical protective equipment, or PPP, and during the pandemic this has been one of the hottest products. Shares are up 209% year-to-date but they still have a P/S ratio of just 0.1.
4.Superior Group of Companies, Inc. (SGC - Free Report) is a small cap company that makes uniforms, does custom business branding and operates The Office Gurus. In the second quarter, net sales were up 73%. Not only is this 100-year old company paying its dividend, it announced a special dividend. It’s still a value, with a price-to-sales ratio of 0.7.
5.Whirlpool Corporation (WHR - Free Report) saw a significant recovery across all its markets in June. This appliance maker is still paying a dividend, which is currently yielding 2.7%. How cheap is it? It’s trading with a P/S ratio of just 0.6.
What else do you need to know about the P/S ratio and value stocks?
Tune into this week’s episode to find out.
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 >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.