For Immediate Release
Chicago, IL – April 13, 2018 – Zacks Value Investor is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here:
Should You Buy Stocks with P/Es Under 5?
Welcome to Episode #88 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.
This week, she turns her attention to dirt cheap stocks, regardless of their Zacks Rank.
In the past, she has only screened for Zacks #1 (Strong Buys) or #2 (Buys) but why not see how many purely cheap stocks are out there?
Zacks covers about 4400 stocks with the Zacks Rank so the screen was covering that universe.
The screen covered all stocks with P/Es at or below 5.0.
52 stocks came through the screen and it included foreign companies, retailers, energy companies and drug companies. Of the list of 52 stocks, Tracey narrowed it down to just 5 names.
5 Stocks With P/Es Under 5
1. Lannett LCI is a generic drug manufacturer that is facing growing competition. It’s investing in partnerships and licensing deals in order to diversify its revenue base. The company has a new CEO and new names in other leadership positions. But the stock has fallen 37% over the last year and now trades with a forward P/E of just 4.8.
2. Emerge Energy Services EMES is a $218 million market cap niche energy company that mines, produces and distributes silica sand. It lost $0.12 last year but is expected to make $1.38 in 2018 as the energy industry has turned the corner. If you want to know more, tune into the earnings call on May 1. It has a forward P/E of just 4.8.
3. Roadrunner Transportation Systems, Inc. RRTS is a transportation and logistics services provider headquartered in Illinois. It’s a micro-cap stock with a market cap of just $88 million. Shares are trading under $5. It recently restated 2015 and 2016 and refiled the first three quarterly reports of 2017. Revenue in the first 3 quarters last year was up 3.3%. It continues to see rate improvement after a challenging year last year. It’s dirt cheap, with a forward P/E of only 2.1.
4. GameStop GME is still a huge brick and mortar retailer, with 7200 stores worldwide. The holiday quarter was solid with comparable store sales rising 12.2%. But fiscal 2018 comps are expected to be flat to down 5%. And earnings are expected to decline 8.1% year-over-year. It’s only trading at 4.4x.
5. Micron MU has been on virtually every episode of the Value Investor Podcast the last few months because it’s dirt cheap AND it has the fantastic fundamentals. Analysts continue to raise estimates on this Zacks Rank #1 (Strong Buy). Earnings are expected to rise 121% in fiscal 2018. And while investors are worried about fiscal 2019, estimates are rising for that year too.
The There’s a Reason for a Low P/E
A P/E under 5, when the S&P 500 is trading with an average P/E of 17.5, and earnings are expected to be a record in 2018, means that Wall Street is basically ignoring these companies.
The reason may not always be one you want to hear.
Usually stocks with extremely low P/Es are cheap for a reason. There may be a problem with the business or management.
Occasionally, however, there is a true value superstar which simply has a low P/E.
But buyers of super low P/E stocks better do their homework.
Caveat Emptor, as they say.
What else should you know about the super cheap stocks?
Find out on this week’s podcast.
Breaking News: Cryptocurrencies Now Bigger than Visa
The total market cap of all cryptos recently surpassed $700 billion – more than a 3,800% increase in the previous 12 months. They’re now bigger than Morgan Stanley, Goldman Sachs and even Visa! The new asset class may expand even more rapidly in 2018 as new investors continue pouring in and Wall Street becomes increasingly involved.
Zacks’ has just named 4 companies that enable investors to take advantage of the explosive growth of cryptocurrencies via the stock market.
Click here to access these stocks. >>
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec and she also hosts the Zacks Market Edge Podcast on iTunes.
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Roadrunner Transportation Systems, Inc (RRTS) : Free Stock Analysis Report
Lannett Co Inc (LCI) : Free Stock Analysis Report
Emerge Energy Services LP (EMES) : Free Stock Analysis Report
GameStop Corp. (GME) : Free Stock Analysis Report
Micron Technology, Inc. (MU) : Free Stock Analysis Report
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