- (1:30) – Momentum Value Stocks: Stock Screener
- (5:40) – Tracey’s Top Stock Picks: HCA, M, PCMI, EVTC, OFG, FBC
- (16:30) – Episode Roundup: Podcast@Zacks.com
Welcome to Episode #103 of the Value Investor Podcast
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio service, shares some of her top value investing tips and stock picks.
There’s been a lot of talk about Apple this week as it reported earnings and beat again. It’s been talked about as a value stock because it’s the cheapest of the FAANG stocks and Warren Buffett owns it.
But Apple shares aren’t as cheap as they used to be. The stock now trades with a forward P/E of 17.
Apple shares are up about 16% year-to-date, which is easily beating the S&P 500.
But are there other value stocks that have been as hot, or even hotter, in 2018 than Apple?
Screening for Value Stocks with Big Momentum
Tracey put together a screen to find value stocks that are values but are just as hot as Apple.
To find the “hotness”, she screened for companies within 10% of their 52-week highs.
Additionally, because Apple was up about 10% before its earnings report, she required the shares to have gained at least 10% year-to-date.
For value, she included a forward P/E of under 15.
And to get rising earnings estimates, she included only Zacks Rank #1 (Strong Buy) or #2 (Buy) stocks.
The result was 22 stocks.
That’s not too shabby considering that this screen should be pretty narrow.
Out of those 22, these 5 stocks stood out as having great momentum. They all have out performed Apple, so far, in 2018.
5 Value Stocks Hotter than Apple in 2018
1. HCA Healthcare (NYSE:HCA)is a large cap healthcare company that owns 178 hospitals, 120 freestanding surgery centers, emergency rooms and urgent care facilities in the United States and in London. Shares are up 39% year-to-date and are near new 52-week highs. It has a forward P/E of just 13.5 and analysts expect double digit earnings growth.
2. Macy’s (NYSE:M) shares are up 51% year-to-date but they’re still really cheap. It trades with a forward P/E of just 10.4. Macy’s also rewards shareholders with a juicy dividend, yielding 4.2%. It hasn’t yet reported earnings. Can it keep this momentum?
3. PCM Inc (NASDAQ:PCMI) provides technology solutions to businesses, government and individual customers. On July 25, it reported record second quarter results in earnings, gross margins and gross profit. It’s dirt cheap, with a forward P/E of 9.6. Shares have soared in 2018, up 127%. Is there still more gas in the tank?
4. Evertec (NYSE:EVTC) is a tech and electronic transaction company based in San Juan, Puerto Rico which does business in 26 countries in Latin America and the Caribbean. Shares are up 69% year-to-date as it saw elevated sales volume in the second quarter due to Puerto Rico’s post hurricane recovery. It has a forward P/E of just 14 and raised 2018 guidance.
5. OFG Bancorp (NYSE:OFG) is a small cap Puerto Rican bank (see a trend here?) which has soared 86% in 2018. It was bullish on its July conference call saying that Puerto Rico is recovering after the hurricane and that “economic activity and optimism are gaining momentum.” Even with the big gains, it has a forward P/E of just 11.7.
Most investors probably aren’t familiar with any of these 5 stocks.
But it just goes to show you that value investors can still find opportunities, with some of them in unusual places, such as a post-hurricane Puerto Rico.
What else should you know about value stocks that are breaking out?
Tune into this week’s podcast to find out.
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