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Learn the Basics of Value Stock Screening

  • (0:30) - How Do You Find Good Value Stocks?

  • (5:50)  - The Metrics For The Perfect Screener

  • (14:20) - Tracey’s Top Stock Picks

  • (27:30) - Episode Roundup: WIRE, SIG, HIVE

  • Podcast@Zacks.com

 

Welcome to Episode #292 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.

It’s time to return to the basics.

How do you find value stocks? Where do you look? If you’re going to “screen” for them, where do you find the screens?

Zacks Free Basic Stock Screens

On Zacks.com, under the Screening Tab on the home page, you can find 9 free predefined stock screens.

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These are “basic” screens that include value, growth, income, small caps and low beta stocks. Tracey ran the two free value stock screens but they gave her over 100 stocks in total.

Desperate to trim the number, she created her own free value screen on Zacks.com using the Stock Screener tool, looking for Zacks Rank #1 (Strong Buy) stocks with a forward P/E under 5.

There are only 246 Zacks Strong Buy stocks, the highest of the Zacks Ranks.

That screen still returned 33 stocks.

3 Dirt-Cheap #1 Ranked Stocks

1.       Encore Wire Corp. WIRE

Encore Wire is a manufacturer of copper and aluminum for residential, commercial and industrial wire needs. It has no long-term debt and had cash on hand of $469.5 million at the end of last quarter.

Encore Wire shares are down 15% year-to-date but are up 56% over the last year. Earnings are expected to rise 2.4% this year to $26.86.

It’s cheap, with a forward P/E of just 4.5. Encore Wire has a small dividend and is also doing a share repurchase program.

Should Encore Wire be on your short list?

2.       Signet Jewelers SIG

Signet Jewelers operates over 2800 jewelry store locations in the United States, UK and Canada, under the brands Kay, Zales and Jared, among others.

Shares of Signet Jewelers have fallen 27% year-to-date but are off the summer lows.

Earnings are expected to be up this year, climbing by just 1.5%.

Signet Jewelers is cheap with a forward P/E of just 4.9 and a PEG ratio of 0.6. A PEG ratio under 1.0 usually indicates both growth and value.

With fears of a recession still front and center, should investors be taking a chance on Signet Jewelers anyway?

3.       HIVE Blockchain Technologies HIVE

HIVE Blockchain Technologies is a cryptocurrency miner which owns green energy powered data center facilities in Canada, Sweden and Iceland.

In July, HIVE Blockchain Technologies announced it had record annual revenue for the year ended Mar 31, 2022. Revenue was $211 million with earnings of $79 million, or $0.90 per share.

But shares of HIVE Blockchain Technologies have fallen 62% year-to-date even while it’s reporting record revenue.

It’s extremely cheap, with a forward P/E of just 1.4 and analysts are bullish on fiscal 2023, with earnings expected to rise 283%.

Should value investors take a chance on small cap HIVE Blockchain Technologies or is the P/E telling you to be cautious?

What Else Do You Need to Know About Basic Value Screening?

Tune into this week’s podcast to find out.


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
 
Signet Jewelers Limited (SIG) : Free Stock Analysis Report
 
Encore Wire Corporation (WIRE) : Free Stock Analysis Report
 
HIVE Blockchain Technologies Ltd. (HIVE) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research