(0:45) - Where To Find Value Heading Into 2020
(4:30) - Is There Value In Retail?
(10:40) - Will Small Banks Be The Place To Invest?
(15:15) - Are ETFs Your Best Bet?
(28:00) - Episode Roundup: DKS, TGT, TLYS, BDGE, FDEF, QABA, PSCF, XLF
Welcome to Episode #170 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 2019 winding down, it’s time for investors to think about their 2020 investing plan.
With the big cap stock indexes continuing to hit new all-time highs, it’s easy for value investors to get discouraged thinking that there are no deals in this market.
But they would be wrong.
Screening for Cheap Stocks
If you want to know where the value stocks will be in 2020, you have to start looking for them in 2019.
Which industries has Wall Street avoided in 2019?
But investors should look not only at industries out of favor, but also those companies where earnings may be on the rise.
Cheap stocks, with forward P/Es under 20 and P/S ratios under 1.0, plus Zacks Ranks of #1 (Strong Buy) is a powerful combination.
Running that screen produces 31 stocks.
If you add in Zacks Rank #2 (Buy) stocks, you get an even larger list which includes more industries.
You’re not going to find many technology stocks, as they simply aren’t cheap enough. Nor are the agriculture stocks, which have been beaten up in 2019 thanks to the trade war, going to appear as the Zacks Ranks are #4 (Sell) or #5 (Strong Sells) right now.
But you will find two other industries that have taken their lumps in 2019.
5 Top Ranked Value Stocks
1. Dick’s Sporting Goods DKS has had quite the wild ride in 2019 as the shares are now up about 50% year-to-date. But they’re still a value, with a forward P/E of just 13.1.
2. Target TGT has had a better year than Apple. Shares are up 93% year-to-date as the big box retailer has finally broken out to new highs. Yes, there’s some value still left in the shares as it trades with a P/S ratio of just 0.8.
3. Tilly’s TLYS is a West Coast-inspired apparel, footwear and accessories retailer for teens and young adults. It had positive comps again in the third quarter, up 3.1%, and saw a strong start over Thanksgiving weekend to the holiday season. Shares have lagged the market in 2019, up just 8.5%. It’s still cheap with a forward P/E of 13.4.
4. Bridge Bancorp BDGE is a commercial bank on Long Island and the greater New York area with 40 retail branches. It has a forward P/E of just 13.2 and analysts expect it to grow 2020 earnings by 8.6%. Investors get a dividend, currently yielding 2.7%.
5. First Defiance Financial Corp. FDEF is another bank with rising earnings estimates. 1 estimate has been revised higher for 2020 in the last month. First Defiance is the holding company for the First Federal Bank of the Midwest and the First Insurance Group, which does business in Ohio, Michigan and Indiana. It has a market cap of $616 million and also pays a dividend, currently yielding 2.9%.
Energy is another industry where investors can find value heading into 2020 as some stocks recently hit multi-year lows.
To listen to the recent Value Investor podcast on cheap energy stocks called Energy Stocks: Values or Traps?, click here.
What else should you know about value investing in 2020?
Listen to this week’s podcast to find out.
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.
Today, See These 5 Potential Home Runs >>
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
Bridge Bancorp, Inc. (BDGE) : Free Stock Analysis Report
First Defiance Financial Corp. (FDEF) : Free Stock Analysis Report
Tilly's, Inc. (TLYS) : Free Stock Analysis Report
Target Corporation (TGT) : Free Stock Analysis Report
DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research