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Tags: zacks | value | stocks

Zacks: 3 Value Stocks Poised to Surge in New Year

Zacks: 3 Value Stocks Poised to Surge in New Year

Chuahtc8 | Dreamstime.com

Wednesday, 18 December 2019 09:25 AM EST

Tracey Ryniec, the editor of Zacks Value Investor portfolio, recently offered three individual value stocks poised to rise in the new year after having a great 2019.

A value stock is commonly defined as a stock that trades at a lower price relative to its fundamentals, such as dividends, earnings, or sales, making it appealing to value investors, Investopedia explains.

Value stocks, as a group, still underperformed the S&P 500 including both large cap and small cap value, Zacks explained.

But looking on the bright side, the large cap value ETFs like the Vanguard Value ETF VTV and the Invesco S&P 500 Pure Value ETF RPV rebounded in 2019.

The Vanguard Value ETF is up 20.2% year-to-date and the Invesco Pure Value ETF has gained 17.7%.

Here are the three individual value stocks:

  • American Woodmark Corp. (AMWD) saw a big sell-off in 2018 on fears about the housing market and the consumer. "This kitchen cabinet maker was cheap. Shares have rallied 80% in 2019 compared to just a 25% gain for the S&P 500. And they’re still cheap, with a forward P/E of just 14," Zacks said.
  • DR Horton (DHI), "along with many of the other home builders, has also been hot this year now that the Fed is cutting rates and mortgage rates have hit new lows. These shares are up 57% year-to-date and yet they’re still cheap with a forward P/E of 11.3," Zacks said.
  • JPMorgan Chase & Co (JPM) "caught a bid in the second half of 2019. Shares are up 35% year-to-date to new 52-week highs. Yet, this mega-bank is still a value, with a forward P/E of just 13."

Meanwhile, value-style investing could make a comeback due to receding recession and trade war fears, Charlie Bobrinskoy, head of the investment group at Ariel Funds told USA Today.

“The names that are the cheapest are the ones that have exposure to the overall economy,” Bobrinskoy says. 

"Value stocks Bobrinskoy likes include BorgWarner, the maker of powertrains and auto parts, which got beaten down over worries about slowing auto sales; advertising firm Interpublic Group, whose shares got hit due to fears of companies cutting back on ads; and Kennametal, which makes cutting tools used to rebuild roads. All three stocks trade at around 11 times projected 2020 earnings, he says, which is cheaper than the S&P 500’s price-to-earnings ratio of roughly 18.5."

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InvestingAnalysis
Tracey Ryniec, the editor of Zacks Value Investor portfolio, recently offered three individual value stocks poised to rise in the new year after having a great 2019.
zacks, value, stocks
395
2019-25-18
Wednesday, 18 December 2019 09:25 AM
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