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5 Top Value Stocks to Buy in a Volatile April

Nalak Das

Wall Street’s ordeal seems to be never-ending with the three major stock indexes’ closing significantly lower on the first trading day of the second-quarter 2020. Notably, this came following the worst-ever first-quarter in Wall Street’s history. In fact, volatility is likely to persist in April as the panoptic impact of the coronavirus outbreak is yet to be realized in the United States and globally.

Nevertheless, the sound economic fundamentals of the United States held it in good stead even during the coronavirus-induced market rout. Further, the decline is likely to be limited as it is widely believed that the number of infected would reach its zenith by the second half of this month. It would be a prudent decision to buy those stocks on the dip that has the potential to rally once the market stabilizes.

Disappointing Start to Second-Quarter 2020

Wall Street commenced second-quarter 2020 on a sour note. All three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — tumbled 4.4% on Apr 1. Moreover, the small-cap specific Russell 2000 index also plunged 7%.

This marked the worst-ever performance by the major stock indexes on the first trading day of any quarter. In fact, stocks within defensive sectors like utilities and real estate suffered the maximum impact as market participants remained concerned that people won’t pay rent or utility payments.

Notably, the Dow, the S&P 500 and the Nasdaq Composite — plunged 23.2%, 20% and 14.2%, respectively, in first-quarter 2020. This was the worst ever-first-quarter performance of both the Dow and the S&P 500. Additionally, these three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — are still down 29.1%, 27% and 25%, respectively, from their all-time highs recorded in mid-February.

Has the Stock Market Hit Rock Bottom?

Economists and financial experts are divided on the question whether Wall Street has already hit rock bottom or not. Although it’s too early to say that the market has bottomed out, it looks like that the panic selling of equities by market participants — popularly called as selling everything — is over.

U.S. stock markets are currently witnessing extremely low valuation on account of the unprecedented non-financial hazard to global financial markets. Yesterday's decline was primarily due to President Donald Trump's statement to U.S. citizens to prepare for “very, very painful two weeks.”

At this stage, investors should be prepared to minimize fluctuations in their portfolio and consequently rebalance it with suitable financial assets to maintain stability. Thus, it would be prudent to pick up value stocks with a favorable Zacks Rank.

Our Top Picks

We have narrowed down our search to five such stocks. Each of them carries a Zacks Rank #1 (Strong Buy) and a Value Score of A or B. You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performance of our five picks in the past three months.

 

DaVita Inc. DVA is a leading provider of dialysis services in the United States to patients suffering from chronic kidney failure, also known as end stage renal disease. It operates kidney dialysis centers and provides related medical services primarily in dialysis centers and in contracted hospitals across the country.

The forward price-to-earnings ratio (P/E) for the current financial year is 12, lower than the industry average of 22. It has a PEG ratio of 0.55, lower than the industry average of 1.80. The company has an expected earnings growth rate of 12.2% for the current year. The Zacks Consensus Estimate for current year earnings has improved by 9.9% over the past 60 days.

Cardinal Health Inc. CAH operates as an integrated healthcare services and products company in the United States and internationally. The company provides customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, and physician offices. It operates through two segments, Pharmaceutical and Medical.

The forward price-to-earnings ratio (P/E) for the current financial year is 8.9, lower than the industry average of 19.4. It has a PEG ratio of 1.44, lower than the industry average of 1.64. The company has an expected earnings growth rate of 1.9% for the current year (ending June 2020). The Zacks Consensus Estimate for current year earnings has improved by 6.3% over the past 60 days.

TEGNA Inc. TGNA is a media company in the United States operating television stations and radio stations that deliver television programming and digital content. It offers content and information to consumers across various platforms. The company also provides solutions for advertisers through TEGNA Marketing Solutions.

The forward price-to-earnings ratio (P/E) for the current financial year is 4.7, lower than the industry average of 5.4. It has a PEG ratio of 0.45, lower than the industry average of 0.47. The company has an expected earnings growth rate of 66.7% for the current year. The Zacks Consensus Estimate for current year earnings has improved by 6.5% over the past 60 days.

SLM Corp. SLM is a bellwether in education finance primarily operating as a saving, planning and paying for college company in the United States. It originates and services private education loans to students or their families.

The forward price-to-earnings ratio (P/E) for the current financial year is 3.6, lower than the industry average of 4. It has a PEG ratio of 0.20, lower than the industry average of 0.33. The company has an expected earnings growth rate of 48% for the current year. The Zacks Consensus Estimate for current year earnings has improved by 5.6% over the past 60 days.

America Movil, S.A.B. de C.V. AMX provides telecom services in Latin America, the United States, the Caribbean and Europe. It offers wireless and fixed voice services, including airtime, local, domestic, and international long-distance services and network interconnection services.

The forward price-to-earnings ratio (P/E) for the current financial year is 9.1, lower than the industry average of 10.6. It has a PEG ratio of 0.53, lower than the industry average of 0.75. The company has an expected earnings growth rate of 17% for the current year. The Zacks Consensus Estimate for current year earnings has improved by 6% over the past 60 days.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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