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7 Economic Value Stocks that Should Be in Your Portfolio

Zacks Equity Research

The improving U.S. economy, increasing consumer spending and improving oil prices are expected to bring forth few winners across the equity universe in 2016. However, in the contemporary volatile equity market, investors should allocate their funds with a clear roadmap.

Looking for Value

We perceive that investors can do well by acquiring less risky stocks rather than opting for the uncertain ones. Investing in value stocks could essentially be a safer bet at this moment, given their penchant for momentum in price and steady growth.

Value investing provides a chance to enter the market and grasp stocks that have been unnoticed by most investors, and are thus traded cheap. Further, these stocks often possess low P/Es, yield sound dividends and have concrete outlooks.

However, is it enough to invest one’s hard-earned money on any value stocks?

It would be more feasible for investors to invest in less pricy value stocks because the market-wide unpredictability is yet to be addressed. By channelizing money in less-expensive stocks, investors would be able to buy a large number of shares of a company.  

The strategy facilitates investors to magnify their returns with even a minuscule monetary gain in the stock price, as the percentage gain on such stocks is much higher.

Thus, for people who want the best out of less-priced value stocks and even welcome the power of a discount, we hereby provide few prospective that are still priced short of aptness.

Our Picks

Through our style score system, we have chosen 7 stocks that might prove to be a boon for value investors.

Our Value Style Score brings about all valuation metrics into one actionable score that assists investors steer clear of ‘value traps’ and spot stocks that are actually trading at a discount.

Back-tested results show that stocks with Value Style Scores of ‘A,’ when pooled with a Zacks Rank #1 (Strong Buy) or #2 (Buy) offer the best investment opportunities.

All the value bets below sport a solid Zacks Rank and an attractive Value Style Score. Moreover, these stocks are currently trading below $20, which makes them all the more rewarding.

Air France-KLM SA AFLYY, along with its subsidiaries offers premium passenger transportation services on programmed flights.

Zacks Rank: #1
Value Score: A
Stock Trading at: $9.00
Current Year Expected EPS Growth Rate: 29.46%

Brocade Communications Systems, Inc. BRCD provides unique internet protocol and storage area networking solutions for variable corporate organizations in the global forum.

Zacks Rank: #1
Value Score: A
Stock Trading at: $10.00
Current Year Expected EPS Growth Rate: 7.30%  

Central Garden & Pet Company CENT produces and sells variable products for the lawn & garden and pet supplies industries in the U.S.

Zacks Rank: #1
Value Score: A
Stock Trading at: $14.33
Current Year Expected EPS Growth Rate: 10.00%  

Daqo New Energy Corp. DQ, a renowned semiconductor equipment and materials company that manufactures and markets wafers and polysilicon.

Zacks Rank: #1
Value Score: A
Stock Trading at: $18.88
Current Year Expected EPS Growth Rate: 7.00%  

Cementos Pacasmayo SAA CPAC, a renowned cement company that produces, distributes and sells cement as well as variable cement related products.

Zacks Rank: #2
Value Score: A
Stock Trading at: $7.03
Current Year Expected EPS Growth Rate: 13.78%  

Rentech, Inc. RTK, a popular agricultural chemicals company that offers specialized wood fiber processing services as well as wood pellets and chips in the market.

Zacks Rank: #2
Value Score: A
Stock Trading at: $2.42
Current Year Expected EPS Growth Rate: 15.00%  

Seadrill Partners LLC SDLP, renowned oil & gas exploration and drilling company. By owning and acquiring various offshore drilling units, the company offers its services to many oil and gas companies in the global forum.

Zacks Rank: #2
Value Score: A
Stock Trading at: $3.46
Current Year Expected EPS Growth Rate: 21.00%  

Bottom Line

Keeping in mind the existing economic rudiments, investors would play safe by accepting a risk-averse attitude. By investing in value stocks like those revealed above, investors can witness regular earnings growth and earn steady income that would, most likely, guide to capital appreciation as well.

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