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Welcome to Episode #374 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.
While many stocks are hitting new 52-week highs, there are always some that are going the other way, and are hitting new 52-week lows.
You can screen for stocks trading at their 52-week lows on the Zacks.com basic screener. Tracey ran that screen, without any other metrics. She didn’t even include the Zacks Rank.
It returned 450 stocks trading AT the lows.
That’s a lot of stocks. And a dozen popular, well-known companies, were among them.
Are there any deals among these stocks? Or are they traps?
What is the Difference Between a Value Stock and a Trap?
Remember, a value stock is defined not by the price of the stock but by its valuation. They usually have low P/E and P/S ratios, among other criteria. But lots of stocks can qualify by that metric.
A cheap stock becomes a trap when the earnings are expected to decline. Value investors want cheap stocks where earnings are still expected to grow. In fact, all investors should want stocks with rising earnings.
But it’s a rare combination to get a stock near 52-week lows AND it still has earnings growth.
Nike shares have collapsed to multi-year lows as business remains slow following the pandemic. Nike hit a 52-week low, but is also now down 17.6% over the last 5 years. That is well below the S&P 500 which is up 86% during that same period.
Even after the stock plunge, Nike isn’t that cheap. It trades with a forward P/E of 23 and a P/S ratio of 2.2. Neither one of those is a “value.”
Deere has been trading in a narrow trading range for the last three years but it recently touched its 52-week low. Deere shares are down 8.5% year-to-date but over the last 5 years, are up 121%.
Deere actually has value characteristics with a forward P/E of just 13.9. It also pays a dividend, yielding 1.7%.
Paycom Software is a cloud-based HR and payroll software provider. Software stocks have been out of favor and that is true with Paycom. Shares are down 27.8% year-to-date and are also at 5-year lows, down 38.7% during that time.
However, Paycom has no debt and pays a dividend, currently yielding 1.1%. It’s also a rare Zacks Rank #1 (Strong Buy) which is also trading at its 52-week lows. There is a disconnect with the Street.
Etsy was a big winner during the pandemic as people bought homemade masks and other items for living, and working, at home. But shares of Etsy have given up their pandemic rally. It is now down 6.6% over the last 5 years, while the S&P 500 is up 86% during that same time.
Etsy isn’t cheap. It has a PEG ratio of 4.5. Etsy also doesn’t pay a dividend.
Las Vegas Sands owns resorts in the United States and Asia. Shares were at new 52-week lows in July 2024, down 13% year-to-date. Over the last 5-years, Las Vegas Sands has also lagged, falling 33.4%.
Las Vegas Sands is cheap with a PEG ratio of 0.7. It also pays a dividend, which helps if you’re being patient, currently yielding 1.9%.
Is Las Vegas Sands a value or a trap?
What Else Should You Know About Stocks at 52-Week Lows?
Tune into this week’s podcast to find out.
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Stocks at 52-Week Lows: Values or Traps?
Welcome to Episode #374 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.
While many stocks are hitting new 52-week highs, there are always some that are going the other way, and are hitting new 52-week lows.
You can screen for stocks trading at their 52-week lows on the Zacks.com basic screener. Tracey ran that screen, without any other metrics. She didn’t even include the Zacks Rank.
It returned 450 stocks trading AT the lows.
That’s a lot of stocks. And a dozen popular, well-known companies, were among them.
Are there any deals among these stocks? Or are they traps?
What is the Difference Between a Value Stock and a Trap?
Remember, a value stock is defined not by the price of the stock but by its valuation. They usually have low P/E and P/S ratios, among other criteria. But lots of stocks can qualify by that metric.
A cheap stock becomes a trap when the earnings are expected to decline. Value investors want cheap stocks where earnings are still expected to grow. In fact, all investors should want stocks with rising earnings.
But it’s a rare combination to get a stock near 52-week lows AND it still has earnings growth.
5 Stocks at Their 52-Week Lows: Values or Traps?
1. Nike, Inc. (NKE - Free Report)
Nike shares have collapsed to multi-year lows as business remains slow following the pandemic. Nike hit a 52-week low, but is also now down 17.6% over the last 5 years. That is well below the S&P 500 which is up 86% during that same period.
Even after the stock plunge, Nike isn’t that cheap. It trades with a forward P/E of 23 and a P/S ratio of 2.2. Neither one of those is a “value.”
Should value investors be patient on Nike?
2. Deere & Company (DE - Free Report)
Deere has been trading in a narrow trading range for the last three years but it recently touched its 52-week low. Deere shares are down 8.5% year-to-date but over the last 5 years, are up 121%.
Deere actually has value characteristics with a forward P/E of just 13.9. It also pays a dividend, yielding 1.7%.
Is Deere a value or a trap?
3. Paycom Software, Inc. (PAYC - Free Report)
Paycom Software is a cloud-based HR and payroll software provider. Software stocks have been out of favor and that is true with Paycom. Shares are down 27.8% year-to-date and are also at 5-year lows, down 38.7% during that time.
However, Paycom has no debt and pays a dividend, currently yielding 1.1%. It’s also a rare Zacks Rank #1 (Strong Buy) which is also trading at its 52-week lows. There is a disconnect with the Street.
Is Paycom Software a value or a trap?
4. Etsy, Inc. (ETSY - Free Report)
Etsy was a big winner during the pandemic as people bought homemade masks and other items for living, and working, at home. But shares of Etsy have given up their pandemic rally. It is now down 6.6% over the last 5 years, while the S&P 500 is up 86% during that same time.
Etsy isn’t cheap. It has a PEG ratio of 4.5. Etsy also doesn’t pay a dividend.
Is Etsy a value or a trap even at the lows?
5. Las Vegas Sands Corp. (LVS - Free Report)
Las Vegas Sands owns resorts in the United States and Asia. Shares were at new 52-week lows in July 2024, down 13% year-to-date. Over the last 5-years, Las Vegas Sands has also lagged, falling 33.4%.
Las Vegas Sands is cheap with a PEG ratio of 0.7. It also pays a dividend, which helps if you’re being patient, currently yielding 1.9%.
Is Las Vegas Sands a value or a trap?
What Else Should You Know About Stocks at 52-Week Lows?
Tune into this week’s podcast to find out.