5 Cheap Strong Buy Stocks in 2023
(0:30) - Finding Strong Value Stocks: Stock Screen Criteria
(5:45) - Tracey’s Top Stock Picks: Creating A Watchlist
(15:00) - Episode Roundup: BLDR, ENR, GPS, KBH, MTW
Podcast@Zacks.com
Welcome to Episode #338 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 a massive first half of the year rally, many are talking about how “expensive” the stock market is. But what if you could buy a top Zacks ranked stock and it was cheap, with attractive valuations?
Screening for Top Ranked Value Stocks
In order to find cheap stocks, screen with a P/E ratio under 20 and a P/S ratio under 1.0. Value investors routinely use both the P/E and P/S ratios to find the cheapness component.
Then add on the Zacks Rank of #1 (Strong Buy). That’s the top Zacks Rank. There are just 238 stocks that have that rank right now. It’s an exclusive club.
When it’s combined with the value criteria, the screen returned 41 stocks. They’re in a bunch of different industries but a few stand out: homebuilders, retailers and industrials.
5 Cheap Strong Buy Stocks
1. Builders FirstSource, Inc. (BLDR)
Builders FirstSource is a retailer that specializes in the professional building industry. It recently beat on earnings. The shares of Builders FirstSource have jumped 122% year-to-date and were hitting new 5-year highs. Over that 5-year period, they’re up 720%.
Yet Builders FirstSource is still cheap with a forward P/E of 14.
Is Builders FirstSource too hot to handle right now?
2. Energizer Holdings, Inc. (ENR)
Energizer makes batteries. It’s a Zacks Rank #1 (Strong Buy) but it hasn’t yet reported earnings this quarter. Energizer will report on Aug 8, 2023.
Shares of Energizer is up just 8.6% year-to-date. It’s cheap with a forward P/E of 11.4 and it pays a dividend, currently yielding 3.4%.
Should Energizer be on your short list?
3. The Gap, Inc. (GPS)
The Gap is back as a Zacks Rank #1 (Strong Buy). Earnings are expected to rise 262% in fiscal 2023 to $0.65 from a loss of $0.40 last year.
Shares of Gap are down 9% year-to-date. They’re cheap. Gap trades with a price-to-sales ratio of 0.3. A P/S ratio under 1.0 indicates a company is undervalued.
Gap pays a dividend, currently yielding 5.7%. It also has a new CEO.
Should Gap be on your short list?
4. KB Home (KBH)
KB Home’s earnings are expected to be down 31% year-over-year but the analysts have been raising estimates in the last 60 days so KB Home has a Zacks #1 Rank.
Even though shares of KB Home are up 70% year-to-date, it’s still cheap with a forward P/E of 8.7 and a P/S ratio of 0.6.
After the massive rally, is it too late to jump into KB Home?
5. The Manitowoc Company (MTW)
The Manitowoc Company is a leading provider of engineered lifting solutions including hydraulic cranes, boom trucks and tower cranes. This Zacks Rank #1 hasn’t yet reported earnings. The Manitowoc Company will do so on Aug 7, 2023.
Shares of The Manitowoc Company are up 93% year-to-date but it’s still cheap with a forward P/E of just 0.3.
Should The Manitowoc Company be on your short list?
What Else Do You Need to Know About Cheap Zacks #1 Rank Stocks?
Tune into this week’s podcast to find out.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The Manitowoc Company, Inc. (MTW) : Free Stock Analysis Report
Energizer Holdings, Inc. (ENR) : Free Stock Analysis Report
The Gap, Inc. (GPS) : Free Stock Analysis Report
Builders FirstSource, Inc. (BLDR) : Free Stock Analysis Report
KB Home (KBH) : Free Stock Analysis Report
