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Zacks Value Investor Highlights: Walmart, Whirlpool, US Foods Holding, Modine Manufacturing and The Andersons
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For Immediate Release
Chicago, IL – July 30, 2021 – Zacks Value Investor 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:
Screening for Cheap Stocks Using the P/S Ratio
Welcome to Episode #245 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.
As the growth stocks have continued to rally, there have been concerns about valuation, especially when it comes to their price-to-sales (P/S) ratios.
For some growth stocks, the P/S ratio has soared over 10.
A P/S ratio of 1 means an investor is paying $1 for every $1 of sales. It's a neutral P/S ratio.
A P/S ratio under 1, usually indicates value because that means an investor is getting the sales for less than they are worth.
We know a lot of growth stocks have high P/S ratios, but how many stocks have low P/S ratios right now?
Screening for Cheap Stocks Using the P/S Ratio
Obviously, the first component of a screen would be a P/S ratio under 1.0.
Tracey also added stocks trading above $5 to keep out the penny stocks.
Additionally, adding the Zacks Rank of #1 (Strong Buy) or #2 (Buy) also should, hopefully, get you companies that have rising earnings estimates.
The Rank will add a component of quality to this screen. We don't want just cheap stocks. We want good, cheap stocks.
This screen returned 170 stocks.
That's a lot of cheap stocks with Strong Buy and Buy ranks.
What's in this screen?
5 Cheap Stocks with High Zacks Ranks
1. Walmart (WMT - Free Report) has a price-to-sales ratio of 0.7 but it's forward P/E is a bit high, at 23.9x. It's expected to grow earnings by 8.8% this fiscal year and 5.8% next year. Over the last year, the shares have lagged the S&P 500, adding just 8.2% while the S&P 500 is up 36%.
2. Whirlpool (WHR - Free Report) has a P/S ratio of just 0.6. Earnings are expected to rise 41% this year. Over the last year, shares have gained 33% but they have weakened over the summer on fears of "peak" demand as housing and nesting cools. But has it?
3. US Foods Holding Corp. (USFD - Free Report) is a foodservice distributor to over 300,000 restaurants in the United States. It has a P/S ratio of just 0.3. Shares spiked in Nov 2020 on news of the vaccine but have cooled off the last 3 months, falling 14%, as the outbreak of the Delta variant has gained steam. Is this a buying opportunity?
4. Modine Manufacturing (MOD - Free Report) is a thermal management company that operates in ventilation & AC, data centers and heating. It saw record free cash flow in fiscal 2021 of $117 million. Shares are cheap with a P/S ratio of 0.46 and a forward P/E of 9.9. With shares up 213% in the last year, is it too late to get in?
5. The Andersons (ANDE - Free Report) has the lowest P/S ratio of these 5 companies. It has a ratio of just 0.1. Earnings are expected to rise 1944% this year to $1.84 from $0.09 last year. This agribusiness company has four segments, including commodity trading, ethanol, plant nutrient and rail sector. Shares have fallen 14.4% in the last month. Is it time to buy?
What else should you know about finding cheap stocks using the P/S ratio?
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/performance for information about the performance numbers displayed in this press release.
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Zacks Value Investor Highlights: Walmart, Whirlpool, US Foods Holding, Modine Manufacturing and The Andersons
For Immediate Release
Chicago, IL – July 30, 2021 – Zacks Value Investor 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:
Screening for Cheap Stocks Using the P/S Ratio
Welcome to Episode #245 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.
As the growth stocks have continued to rally, there have been concerns about valuation, especially when it comes to their price-to-sales (P/S) ratios.
For some growth stocks, the P/S ratio has soared over 10.
A P/S ratio of 1 means an investor is paying $1 for every $1 of sales. It's a neutral P/S ratio.
A P/S ratio under 1, usually indicates value because that means an investor is getting the sales for less than they are worth.
We know a lot of growth stocks have high P/S ratios, but how many stocks have low P/S ratios right now?
Screening for Cheap Stocks Using the P/S Ratio
Obviously, the first component of a screen would be a P/S ratio under 1.0.
Tracey also added stocks trading above $5 to keep out the penny stocks.
Additionally, adding the Zacks Rank of #1 (Strong Buy) or #2 (Buy) also should, hopefully, get you companies that have rising earnings estimates.
The Rank will add a component of quality to this screen. We don't want just cheap stocks. We want good, cheap stocks.
This screen returned 170 stocks.
That's a lot of cheap stocks with Strong Buy and Buy ranks.
What's in this screen?
5 Cheap Stocks with High Zacks Ranks
1. Walmart (WMT - Free Report) has a price-to-sales ratio of 0.7 but it's forward P/E is a bit high, at 23.9x. It's expected to grow earnings by 8.8% this fiscal year and 5.8% next year. Over the last year, the shares have lagged the S&P 500, adding just 8.2% while the S&P 500 is up 36%.
2. Whirlpool (WHR - Free Report) has a P/S ratio of just 0.6. Earnings are expected to rise 41% this year. Over the last year, shares have gained 33% but they have weakened over the summer on fears of "peak" demand as housing and nesting cools. But has it?
3. US Foods Holding Corp. (USFD - Free Report) is a foodservice distributor to over 300,000 restaurants in the United States. It has a P/S ratio of just 0.3. Shares spiked in Nov 2020 on news of the vaccine but have cooled off the last 3 months, falling 14%, as the outbreak of the Delta variant has gained steam. Is this a buying opportunity?
4. Modine Manufacturing (MOD - Free Report) is a thermal management company that operates in ventilation & AC, data centers and heating. It saw record free cash flow in fiscal 2021 of $117 million. Shares are cheap with a P/S ratio of 0.46 and a forward P/E of 9.9. With shares up 213% in the last year, is it too late to get in?
5. The Andersons (ANDE - Free Report) has the lowest P/S ratio of these 5 companies. It has a ratio of just 0.1. Earnings are expected to rise 1944% this year to $1.84 from $0.09 last year. This agribusiness company has four segments, including commodity trading, ethanol, plant nutrient and rail sector. Shares have fallen 14.4% in the last month. Is it time to buy?
What else should you know about finding cheap stocks using the P/S ratio?
Listen to this week's podcast to find out.
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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/performance for information about the performance numbers displayed in this press release.