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Zacks Value Investor Highlights: Modine Manufacturing KB Home, Expedia Group, Devon Energy and Taiwan

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For Immediate Release

Chicago, IL – August 9, 2024 – 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:https://www.zacks.com/stock/news/2315614/screening-for-value-and-growth-stocks-using-the-peg-ratio

Screening for Value and Growth Stocks Using the PEG Ratio

Welcome to Episode #377 of the Value Investor Podcast.

 

  • (0:30) - How To Find A Value Stock That Also Has Growth?
  • (5:05) - Tracey’s Top Stock Picks
  • (19:45) - Episode Roundup: MOD, KBH, EXPE, DVN, TSM
  •             Poddcast@Zacks.com

Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.

Value stocks appear to be back in favor this summer. But why not buy a cheap stock which also has growth?

The combination of value AND growth is powerful. The “father” of value investing, Benjamin Graham, was the first to put the combination together when he invented the PEG ratio, which is the price-to-earnings (PE) divided by earnings growth.

A PEG ratio under 1.0 is usually considered to be the ideal to get a cheap stock with growth.

Screening for Value Stocks with Growth Using the PEG Ratio

On Zacks’ stock screener, investors can screen for the PEG ratio under 1.0 to get value stocks that also have growth.

But you shouldn’t stop there.

Tracey added the Zacks Ranks of #1 (Strong Buy) and #2 (Buy), the two highest Zacks Ranks, which should indicate that analysts are revising their earnings estimates for that company higher. When analysts revise earnings estimates higher, that usually means something good is going on at a company.

Why settle for simple earnings growth? Why not get rising earnings as well?

Running this basic screen returned 95 stocks. Many were in the gold mining, energy, and homebuilding industries.

5 Value Stocks That Have Low PEG Ratios

1.       Modine Manufacturing, Inc. (MOD - Free Report)

Modine Manufacturing is a mid-cap company that is in thermal management. Modine recently reported one of the best quarters in the company’s history and it’s been in business since 1916. Modine beat and raised full year earnings guidance.

Shares of Modine are up 65% year-to-date on the AI craze as it supplies cooling to data centers. It has a PEG ratio of just 0.8.

Should Modine Manufacturing be on your short list?

2.       KB Home (KBH - Free Report)

KB Home, the national homebuilder, is expected to grow earnings by 19.2% this year. Yet KB Home remains cheap, with a forward P/E of just 10.

Shares of KB Home are up 29% year-to-date. It’s a Zacks #1 Rank (Strong Buy).

Should a homebuilder like KB Home still be on your short list?

3.       Expedia Group, Inc. (EXPE - Free Report)

Expedia, the online travel company, is still seeing momentum in travel. Expedia is expected to grow its earnings 22% this year.

But shares of Expedia have fallen 23% year-to-date on fears of a recession causing a travel slowdown. It is cheap. Expedia trades with a forward P/E of just 10.8. It has not yet reported second quarter results.

Should a travel stock like Expedia be on your short list?

4.       Devon Energy Corp. (DVN - Free Report)

Devon Energy is a large cap exploration and production company that drills in the Delaware basin. It just acquired acreage in the Williston Basin for $5 billion.

While analysts expect Devon Energy’s earnings to decline 5.4% in 2024, they are expected to rise 16.7% next year. 

Shares of Devon Energy are down 5.5% year-to-date. It’s still cheap with a PEG ratio of 0.8.

Should an energy stock like Devon Energy be on your short list?

5.       Taiwan Semiconductor (TSM - Free Report)

Taiwan Semiconductor is a global manufacturer of semiconductors. Earnings are expected to soar 23% in 2024 and another 27.5% in 2025, mostly on the AI revolution.

Shares of Taiwan Semiconductor have been on tear in 2024, up 44% year-to-date. But shares of TSM are off their recent highs. Yet, the stock still has a PEG ratio of just 0.9.

Is Taiwan Semiconductor your chance to buy a Zacks #1 Rank semiconductor company?

What Else Should You Know About the PEG Ratio?     

Tune into this week’s podcast to find out.

[In full disclosure, Tracey owns shares of MOD and EXPE in Zacks Value Investor portfolio and DVN in her personal portfolio.]

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