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3 Low P/E Stocks Value Investors Should Keep on Their Radar
Yesterday's price action in the market was stellar, and green was widespread. It was quite the gift, as investors have taken hit after hit throughout 2022 so far.
The Fed hopes to achieve a "soft landing" with interest rate increases without tipping the U.S. economy towards a recession. It'll be challenging to pull off, but the Fed is optimistic that it can be achieved.
Additionally, it's worth noting that the Fed can be flexible enough to change its course of action as more economic data rolls in throughout the rest of 2022.
However, the market rebound may already have started; the S&P 500 is well on its way to its first green weekly close after seven consecutive weeks in the red. The three-year chart below shows that the S&P 500 is trading at levels not seen since early March 2021, bouncing on these levels beautifully so far.
Additionally, the S&P 500's forward earnings multiple currently resides at 18.1X, well below 2020 highs of 28.6X, and sitting nicely below the median of 19.9X over the last five years. Furthermore, it's the lowest we've seen the metric since March 2020.
The bears could be tiring out, something everybody can rejoice about. Still, investors need to have the right stocks in their portfolios.
One of the best ways that investors can find these winners is by utilizing the Zacks Rank and Zacks Premium Screens, such as the Zacks High Rank Value screen.
Generally, value investors look for stocks with low P/E's and low P/B's. Unfortunately, not all value stocks are genuine bargains when you get down to the nitty-gritty.
By utilizing the Zacks High Rank Value screen, we can filter value stocks to only those with positive revisions in earnings estimates – the screen provides Zacks Rank #1 (Strong Buy) or #2 (Buy) stocks only.
Three stocks that fit the criteria within the screen include Huntsman Corp., Pangea Logistics Solutions and Avnet. Let's get into why these three stocks are solid value bets.
Huntsman Corporation
Huntsman Corp. shares have been a bright spot in a dim market, providing investors with a solid 5.6% year-to-date return and easily outpacing the S&P 500's performance. The company is a Zacks Rank #1 (Strong Buy) with an overall VGM Score of a B.
Valuation metrics are very reasonable. The company's forward earnings multiple sits nicely at 8.3X, nowhere near 2020 highs of 75.3X, and well below its median of 10.6X over the last five years. Additionally, the value represents a steep 64% discount relative to the S&P 500's forward P/E ratio of 18.1X.
Analysts have been upping their earnings outlook across the board over the last 60 days. For the upcoming quarter, the $1.12 per share estimate displays a sizable 30% growth in the bottom line from the year-ago quarter.
Looking ahead, the current fiscal year EPS estimate sits at $4.41, which reflects a notable 25% growth in earnings year-over-year. Additionally, for FY23, the $4.95 Zacks Consensus Estimate displays further growth in the bottom line of a double-digit 12.5%.
Furthermore, the company has a 2.35% annual dividend yield with a sustainable payout ratio sitting at 21% of earnings. HUN has increased its dividend three times in the past five years, giving it an annualized dividend growth rate of 7.8%.
Pangea Logistics Solutions
Pangea Logistics Solutions shares have been blistering hot year-to-date, providing investors with a massive 72% return that has absolutely crushed the S&P 500's performance. PANL is a Zacks Rank #1 (Strong Buy) with an overall VGM Score of an A.
Looking at valuation, the company sports a 3.9X forward earnings multiple, not even close to 2020 highs of 61.3X and well below the median of 5.4X over the last five years. Additionally, the value represents a resounding 78% discount relative to the S&P 500's forward P/E ratio.
Over the last 60 days, analysts have been revising their estimates positively across all timeframes with a 100% revision agreement. The upcoming quarterly EPS estimate sits at $0.37, registering a 28% growth in earnings from the year-ago quarter.
Furthermore, the Zacks Consensus Estimate sits at $1.67 per share for the current fiscal year, displaying an expansion in the bottom-line of 18% year-over-year. For FY23, the annual EPS estimate of $2.12 reflects further growth in earnings of a sizable 27%.
PANL has an annual dividend yield of 3.04% with a very sustainable payout ratio of 12%. Additionally, the company has increased its dividend three times over the last five years.
Avnet, Inc
Avnet shares have been robust year-to-date, easily outperforming the S&P 500 by accumulating a sizable 17% return. AVT is a Zacks Rank #1 (Strong Buy) with an overall VGM Score of a B.
The company sports a forward P/E ratio of 6.9X, a fraction of its 2020 high of 22.7X and notably below its median of 11.9X over the last five years. Additionally, the value displays a deep 61% discount relative to the S&P 500's forward P/E ratio.
Like PANL and HUN, analysts have been upping their earnings outlook across the board. The Zacks Consensus Estimate for the upcoming quarter of $1.96 per share reflects a very sizable growth in the bottom-line of 75% from the year-ago quarter.
For the current fiscal year, the $6.83 per share estimate represents a massive triple-digit growth in earnings of 152% year-over-year. Additionally, for FY23, earnings are forecasted to climb a respectable 2.4% year-over-year.
For investors with an appetite for income, Avnet has that covered with its 2.19% annual dividend yield with a sustainable payout ratio of 17% of earnings. The company has increased its dividend six times in the past five years, giving it a five-year annualized dividend growth rate of 6.3%.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
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 Investment Ideas feature highlights: Huntsman, Pangea Logistics Solutions, and Avnet
For Immediate Release
Chicago, IL – May 31, 2022 – Today, Zacks Investment Ideas feature highlights Huntsman Corp. (HUN - Free Report) , Pangea Logistics Solutions (PANL - Free Report) and Avnet (AVT - Free Report) .
3 Low P/E Stocks Value Investors Should Keep on Their Radar
Yesterday's price action in the market was stellar, and green was widespread. It was quite the gift, as investors have taken hit after hit throughout 2022 so far.
The Fed hopes to achieve a "soft landing" with interest rate increases without tipping the U.S. economy towards a recession. It'll be challenging to pull off, but the Fed is optimistic that it can be achieved.
Additionally, it's worth noting that the Fed can be flexible enough to change its course of action as more economic data rolls in throughout the rest of 2022.
However, the market rebound may already have started; the S&P 500 is well on its way to its first green weekly close after seven consecutive weeks in the red. The three-year chart below shows that the S&P 500 is trading at levels not seen since early March 2021, bouncing on these levels beautifully so far.
Additionally, the S&P 500's forward earnings multiple currently resides at 18.1X, well below 2020 highs of 28.6X, and sitting nicely below the median of 19.9X over the last five years. Furthermore, it's the lowest we've seen the metric since March 2020.
The bears could be tiring out, something everybody can rejoice about. Still, investors need to have the right stocks in their portfolios.
One of the best ways that investors can find these winners is by utilizing the Zacks Rank and Zacks Premium Screens, such as the Zacks High Rank Value screen.
Generally, value investors look for stocks with low P/E's and low P/B's. Unfortunately, not all value stocks are genuine bargains when you get down to the nitty-gritty.
By utilizing the Zacks High Rank Value screen, we can filter value stocks to only those with positive revisions in earnings estimates – the screen provides Zacks Rank #1 (Strong Buy) or #2 (Buy) stocks only.
Three stocks that fit the criteria within the screen include Huntsman Corp., Pangea Logistics Solutions and Avnet. Let's get into why these three stocks are solid value bets.
Huntsman Corporation
Huntsman Corp. shares have been a bright spot in a dim market, providing investors with a solid 5.6% year-to-date return and easily outpacing the S&P 500's performance. The company is a Zacks Rank #1 (Strong Buy) with an overall VGM Score of a B.
Valuation metrics are very reasonable. The company's forward earnings multiple sits nicely at 8.3X, nowhere near 2020 highs of 75.3X, and well below its median of 10.6X over the last five years. Additionally, the value represents a steep 64% discount relative to the S&P 500's forward P/E ratio of 18.1X.
Analysts have been upping their earnings outlook across the board over the last 60 days. For the upcoming quarter, the $1.12 per share estimate displays a sizable 30% growth in the bottom line from the year-ago quarter.
Looking ahead, the current fiscal year EPS estimate sits at $4.41, which reflects a notable 25% growth in earnings year-over-year. Additionally, for FY23, the $4.95 Zacks Consensus Estimate displays further growth in the bottom line of a double-digit 12.5%.
Furthermore, the company has a 2.35% annual dividend yield with a sustainable payout ratio sitting at 21% of earnings. HUN has increased its dividend three times in the past five years, giving it an annualized dividend growth rate of 7.8%.
Pangea Logistics Solutions
Pangea Logistics Solutions shares have been blistering hot year-to-date, providing investors with a massive 72% return that has absolutely crushed the S&P 500's performance. PANL is a Zacks Rank #1 (Strong Buy) with an overall VGM Score of an A.
Looking at valuation, the company sports a 3.9X forward earnings multiple, not even close to 2020 highs of 61.3X and well below the median of 5.4X over the last five years. Additionally, the value represents a resounding 78% discount relative to the S&P 500's forward P/E ratio.
Over the last 60 days, analysts have been revising their estimates positively across all timeframes with a 100% revision agreement. The upcoming quarterly EPS estimate sits at $0.37, registering a 28% growth in earnings from the year-ago quarter.
Furthermore, the Zacks Consensus Estimate sits at $1.67 per share for the current fiscal year, displaying an expansion in the bottom-line of 18% year-over-year. For FY23, the annual EPS estimate of $2.12 reflects further growth in earnings of a sizable 27%.
PANL has an annual dividend yield of 3.04% with a very sustainable payout ratio of 12%. Additionally, the company has increased its dividend three times over the last five years.
Avnet, Inc
Avnet shares have been robust year-to-date, easily outperforming the S&P 500 by accumulating a sizable 17% return. AVT is a Zacks Rank #1 (Strong Buy) with an overall VGM Score of a B.
The company sports a forward P/E ratio of 6.9X, a fraction of its 2020 high of 22.7X and notably below its median of 11.9X over the last five years. Additionally, the value displays a deep 61% discount relative to the S&P 500's forward P/E ratio.
Like PANL and HUN, analysts have been upping their earnings outlook across the board. The Zacks Consensus Estimate for the upcoming quarter of $1.96 per share reflects a very sizable growth in the bottom-line of 75% from the year-ago quarter.
For the current fiscal year, the $6.83 per share estimate represents a massive triple-digit growth in earnings of 152% year-over-year. Additionally, for FY23, earnings are forecasted to climb a respectable 2.4% year-over-year.
For investors with an appetite for income, Avnet has that covered with its 2.19% annual dividend yield with a sustainable payout ratio of 17% of earnings. The company has increased its dividend six times in the past five years, giving it a five-year annualized dividend growth rate of 6.3%.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
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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.