Zacks.com featured highlights include Select Medical Holdings, Hibbett, PVH and Centene
For Immediate Release
Chicago, IL – November 3, 2023 – Stocks in this week’s article are Select Medical Holdings Corp. SEM, Hibbett, Inc. HIBB, PVH Corp. PVH and Centene Corp. CNC.
Give Your Investments a Boost with These 4 Low P/CF Stocks
In the stock market, it's crucial to align investment strategies with the prevailing market conditions. Notably, the U.S. Federal Reserve's recent decision to maintain interest rates at their current levels has created a compelling case for investors to turn their attention to value stocks. The Fed unanimously agreed to maintain the benchmark interest rate within a target range of 5.25% to 5.5%. This decision underscores the central bank's commitment to fostering a stable financial environment.
We believe investment in stocks made on diligent value analysis is usually considered one of the best practices. In value investing, investors pick stocks that are cheap but fundamentally sound. There are a number of ratios to identify value stocks but none alone can conclusively determine their inherent potential. Each ratio helps an investor understand a particular aspect of the company's business.
One such ratio, Price to Cash Flow (or P/CF), can work wonders in stock picking if used prudently. This metric evaluates the market price of a stock relative to the amount of cash flow that the company is generating on a per share basis — the lower the number, the better. Select Medical Holdings Corp., Hibbett, Inc., PVH Corp. and Centene Corp. boast a low P/CF ratio.
Why P/CF Ratio?
You must be wondering why we are considering this when the most widely used valuation metric is Price/Earnings (or P/E). Well, an important factor that makes P/CF a highly dependable metric is that operating cash flow adds back non-cash charges such as depreciation and amortization to net income, truly diagnosing a company's financial health.
Analysts caution that a company's earnings are subject to accounting estimates and management manipulation. Then again, cash flow is quite reliable. Net cash flow unveils how much money a company generates and how effectively management is deploying the same.
A positive cash flow indicates an increase in the company's liquid assets. This gives the company the means to settle debt, meet its expenses, reinvest in the business, endure downturns and finally undertake shareholder-friendly moves. Negative cash flow implies a decline in the company's liquidity, which, in turn, lowers its flexibility to support these endeavors.
However, an investment decision solely based on the P/CF metric may not fetch the desired results. To identify stocks that are trading at a discount, you should expand your search criteria and take into account the price-to-book ratio, price-to-earnings ratio and price-to-sales ratio. Adding a favorable Zacks Rank and a Value Score of A or B to your search criteria should lead to even better results as these eliminate the chances of falling into a value trap.
Here are four of the eight stocks that qualified the screening:
Select Medical Holdings, one of the largest operators of critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers, sports a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Select Medical Holdings' current financial year sales and EPS suggests growth of 4.2% and 56.9%, respectively, from the year-ago period. SEM has a Value Score of A. Shares of SEM have declined 5% in the past year.
Hibbett, a leading athletic-inspired fashion retailer, carries a Zacks Rank #2. In the last reported quarter, the company delivered an earnings surprise of 25%.
The Zacks Consensus Estimate for Hibbett's current financial year sales suggests growth of 0.4% from the year-ago period. HIBB has a Value Score of A. Shares of HIBB have fallen 27.2% in the past year.
PVH Corp., which operates as an apparel company, carries a Zacks Rank #2. The company came up with a trailing four-quarter earnings surprise of 22.8%, on average.
The Zacks Consensus Estimate for PVH's current financial year sales and EPS suggests growth of 3.7% and 15.3%, respectively, from the year-ago period. PVH has a Value Score of A. Shares of PVH have gained 43.4% in the past year.
Centene, a leading healthcare enterprise, carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 5.6%, on average.
The Zacks Consensus Estimate for Centene's current financial year sales and EPS suggests growth of 4.6% and 14.4%, respectively, from the year-ago period. Centene has a Value Score of A. Shares of Centene have declined 18.5% in the past year.
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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2177444/give-your-investments-a-boost-with-these-4-low-pcf-stocks
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
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Strong Stocks that Should Be in the News
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Hibbett, Inc. (HIBB) : Free Stock Analysis Report
PVH Corp. (PVH) : Free Stock Analysis Report
Centene Corporation (CNC) : Free Stock Analysis Report
Select Medical Holdings Corporation (SEM) : Free Stock Analysis Report
