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Welcome to Episode #381 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.
With the second quarter earnings season mostly winding down, Tracey wanted to look for stocks that now have the top Zacks Rank of Strong Buy, which are also cheap.
When a stock has the top Zacks Rank of #1 (Strong Buy), that usually means that the analysts are raising earnings estimates. And why would they be raising earnings estimates during earnings season? Usually because something “good” is going on at the company.
Perhaps they beat on Q2 earnings and raised full year guidance? That would mean the analysts are usually raising their earnings estimates to get into line with what the company has guided.
At any given time, there are usually only about 230 to 240 companies that are Zacks Strong Buy stocks. This is an elite group even without looking for cheap stocks.
Screening for Top Ranked Cheap Stocks
Tracey deployed a Zacks premium screen that looks for cheap Zacks Strong Buy stocks.
The stocks have to be trading over $5 and have over 100,000 per day trading volume. This is to avoid the microcaps or penny stocks.
For “cheapness,” the screen looks for a price-to-earning (P/E) ratio of 20 or under. This is a little bit higher than Tracey normally looks for. She uses 15x. But it will mean a few more stocks to look at.
The P/E is then combined with the price-to-sale (P/S) ratio under 1.0. A P/S ratio under 1.0 means you are getting a deal on the sales. A P/S of 0.7, for example, means you are paying just $0.70 for every $1.00 of sales.
Assurant is a global business services company which is in insurance. In its second quarter earnings report it said it was raising its 2024 enterprise outlook.
4 estimates are higher in the last 60 days for both 2024 and 2025. Earnings are now expected to rise 6.8% in 2024 and 6.1% in 2025. Assurant is cheap. It trades with a forward P/E of just 11.6 and has a P/S ratio of just 0.9.
Assurant also pays a dividend, yielding 1.5%. Shares of Assurant are up 14.7% year-to-date, which is in-line with the S&P 500.
Should an insurer, like Assurant, be on your value stock short list?
Synchronoss Technologies is a leader in personal cloud. It is a small cap company, with a market cap of just $153.7 million.
2 estimates are up for 2025 in the last 60 days pushing up the Zacks Consensus to $1.15 from $0.35. This is lightly covered on the Street, however. Synchronoss Technologies shares have soared 120% year-to-date, but it’s still cheap with a forward P/E of just 11.
Synchronoss is a subscription-based company with recurring revenue. It recently announced it had retired the company’s preferred stock and reduced the total net debt using a new $75 million term loan facility.
Should value investors consider Synchronoss Technologies?
LSI Industries makes commercial lighting and display solutions. Headquartered in Cincinnati, it has 1900 employees across 16 facilities. It is another small cap company with a market cap of $457 million.
LSI Industries has fallen to a Zacks Rank #2 (Buy) from a Strong Buy since the podcast was recorded, but the Zacks Rank can change daily. One estimate was higher in the last 30 days for both fiscal 2025 and fiscal 2026. Earnings are expected to rise 6% in fiscal 2025 and 34% in fiscal 2026.
Shares of LSI Industries have risen 12.1% year-to-date. It’s cheap with a P/E of 17.2. Even though it’s a small cap, it pays a dividend, yielding 1.3%.
Should a small cap like LSI Industries be on your short list?
What Else Should You Know About Top Ranked Cheap Stocks?
Tune into this week’s podcast to find out.
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Screening for Cheap Strong Buy Stocks
Welcome to Episode #381 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.
With the second quarter earnings season mostly winding down, Tracey wanted to look for stocks that now have the top Zacks Rank of Strong Buy, which are also cheap.
When a stock has the top Zacks Rank of #1 (Strong Buy), that usually means that the analysts are raising earnings estimates. And why would they be raising earnings estimates during earnings season? Usually because something “good” is going on at the company.
Perhaps they beat on Q2 earnings and raised full year guidance? That would mean the analysts are usually raising their earnings estimates to get into line with what the company has guided.
At any given time, there are usually only about 230 to 240 companies that are Zacks Strong Buy stocks. This is an elite group even without looking for cheap stocks.
Screening for Top Ranked Cheap Stocks
Tracey deployed a Zacks premium screen that looks for cheap Zacks Strong Buy stocks.
The stocks have to be trading over $5 and have over 100,000 per day trading volume. This is to avoid the microcaps or penny stocks.
For “cheapness,” the screen looks for a price-to-earning (P/E) ratio of 20 or under. This is a little bit higher than Tracey normally looks for. She uses 15x. But it will mean a few more stocks to look at.
The P/E is then combined with the price-to-sale (P/S) ratio under 1.0. A P/S ratio under 1.0 means you are getting a deal on the sales. A P/S of 0.7, for example, means you are paying just $0.70 for every $1.00 of sales.
This screen produced 32 matches.
3 Cheap Strong Buy Stocks
1. Assurant, Inc. (AIZ - Free Report)
Assurant is a global business services company which is in insurance. In its second quarter earnings report it said it was raising its 2024 enterprise outlook.
4 estimates are higher in the last 60 days for both 2024 and 2025. Earnings are now expected to rise 6.8% in 2024 and 6.1% in 2025. Assurant is cheap. It trades with a forward P/E of just 11.6 and has a P/S ratio of just 0.9.
Assurant also pays a dividend, yielding 1.5%. Shares of Assurant are up 14.7% year-to-date, which is in-line with the S&P 500.
Should an insurer, like Assurant, be on your value stock short list?
2. Synchronoss Technologies, Inc. (SNCR - Free Report)
Synchronoss Technologies is a leader in personal cloud. It is a small cap company, with a market cap of just $153.7 million.
2 estimates are up for 2025 in the last 60 days pushing up the Zacks Consensus to $1.15 from $0.35. This is lightly covered on the Street, however. Synchronoss Technologies shares have soared 120% year-to-date, but it’s still cheap with a forward P/E of just 11.
Synchronoss is a subscription-based company with recurring revenue. It recently announced it had retired the company’s preferred stock and reduced the total net debt using a new $75 million term loan facility.
Should value investors consider Synchronoss Technologies?
3. LSI Industries Inc. (LYTS - Free Report)
LSI Industries makes commercial lighting and display solutions. Headquartered in Cincinnati, it has 1900 employees across 16 facilities. It is another small cap company with a market cap of $457 million.
LSI Industries has fallen to a Zacks Rank #2 (Buy) from a Strong Buy since the podcast was recorded, but the Zacks Rank can change daily. One estimate was higher in the last 30 days for both fiscal 2025 and fiscal 2026. Earnings are expected to rise 6% in fiscal 2025 and 34% in fiscal 2026.
Shares of LSI Industries have risen 12.1% year-to-date. It’s cheap with a P/E of 17.2. Even though it’s a small cap, it pays a dividend, yielding 1.3%.
Should a small cap like LSI Industries be on your short list?
What Else Should You Know About Top Ranked Cheap Stocks?
Tune into this week’s podcast to find out.