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Zacks Value Trader Highlights: Extreme Networks, Griffon and Quanex Building

Zacks Equity Research

For Immediate Release

Chicago, IL – September 27, 2019 – Zacks Value Trader 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:


Screening for Hidden Gem Small-Cap Stocks

Welcome to Episode #159 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.

Once again, in 2019, small caps are trailing the returns of large caps.

The Russell 2000 is up 14.2% year-to-date compared to 18.5% for the S&P 500 and 20.6% for the NASDAQ.

Value stocks also continue to underperform growth.

But that also means that this is a buying opportunity in small cap value stocks. They have lagged and Wall Street is ignoring them.

Screening for Small Cap Value Stocks

How do you find the best small cap value stocks?

You start with the Zacks Rank of #1 (Strong Buy) and #2 (Buy) so that you, hopefully, get rising earnings estimates.

Then you add double digit earnings growth over the last year to get growth.

For value, you can use several metrics, but the P/S ratio under 1.0 will give you companies trading at a discount.

Running this screen, it returned 21 stocks.

Not too shabby for what is otherwise a pretty narrow screen.

3 Hidden Gem Small Cap Stocks with the Magic Combination

1.       Extreme Networks, Inc. EXTR provides software-driven, end to end networking solutions for enterprise customers worldwide. It has doubled in size over the last 5 years, and closed on the Aerohive Networks acquisition in August. It is trading with a P/S ratio of just 0.9 and is expected to have big earnings growth this year.

2.       Griffon Corp. GFF has two segments: Home Building Products and Defense Electronics. In the third quarter, both segments saw strong growth and total revenue was up 11%. It’s cheap, with a P/S ratio of only 0.4. It also is shareholder friendly, which is rare for a small company, with a share buyback program and dividend.

3.       Quanex Building Products Corp. NX manufactures building products including fenestration products and kitchen and baths components. Earnings are expected to be up 46% in fiscal 2019 and another 12.6% in fiscal 2020. It also pays a dividend, currently yielding 1.8%. NX has a P/S ratio of just 0.7.

What else should you know about small cap stocks that are both value and growth stocks?

Find out on this week’s podcast.

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Zacks Investment Research

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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
Extreme Networks, Inc. (EXTR) : Free Stock Analysis Report
Quanex Building Products Corporation (NX) : Free Stock Analysis Report
Griffon Corporation (GFF) : Free Stock Analysis Report
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