5 value stocks you shouldn’t miss

The value strategy consists of finding a stock before the market, positioning itself there and then keeping it to take advantage of its capital gain. Alternatively, you find a high potential stock that has been beaten by the market and take advantage of the downside to build a position.

It’s a fairly simple strategy, but not everyone is successful at it. This is because there are two parts, the first being the estimate of the potential and the second being the price. Most people choose value based on price and do a less than ideal job of identifying potential.

So what often happens is that you go into a cheap stock only to find that the price is not moving. By the time you get out of this, you’ve probably just wasted your time or, as is often the case, you’ve suffered a small loss. This is called a value trap.

It is therefore important to avoid a value trap when selecting value stocks. While there is no one specific formula that will work in all cases, there are a few things you can do to improve your chances of success. The most important thing to do is to check the finances.

If the company’s income and profits are on a general upward trajectory (even if it is a very gradual upward curve and even if there are temporary problems), this indicates that the company has a viable business model and is able to compete effectively. There is therefore a good chance that it will be sufficiently innovative and endowed with competent management. You can confirm this from news articles and the most recent quarterly report.

Stable income, earnings, and cash flow are generally easier to find in large cap stocks, so the best value is often found in these more mature names.

The second part concerns the evaluation. You should check that it is undervalued in terms of P / E, PEG, P / S or any other basis relevant to the industry in which it operates.

Let’s take a look at some examples-

Stellantis STLA

Formerly Fiat Chrysler Automobiles, Stellanis designs, develops, manufactures, distributes and sells passenger vehicles, light trucks, SUVs and light commercial vehicles around the world.

The automotive industry – foreign, to which Stellantis belongs, is in the lowest 8% of industries ranked by Zacks. The industry’s unappealing ranking is understandable given today’s supply chain challenges, the semiconductor shortage, and the advent of electric vehicles that have increased the challenges for many traditional players.

Stellantis shares currently carry a Zacks # 1 (strong buy) rating and A value score. are trading below their median level of last year.

The company’s bottom line was badly hit by the pandemic and related lockdown last year, but rebounded immediately after. As a result, 2021 revenue and profits are expected to grow 83.7% and 173.5% respectively, with more growth the following year. Additionally, the 2021 EPS estimate is up 4.2% in the past 60 days while the 2022 estimate is up 5.9%.

Olin OLN

Olin Corporation is a vertically integrated global producer and distributor of chemicals. It also manufactures ammunition in the United States. Its products are used in a wide range of industries, including water treatment, pulp and paper, soaps and detergents, civil engineering, military and industrial markets.

Olin belongs to the chemical industry – diversified, which is in the top 41% of industries. With manufacturing activity continuing to increase since the lockdown last year, Olin has seen strong and steady revenue growth. Profit growth was also extremely strong.

As a result, analysts continued to raise their earnings expectations. So it turns out that the EPS estimate for 2021 has increased by $ 1.26 (17.1%) in the last 30 days alone. The estimate for 2022 has increased by $ 2.08 (29.9%) over the same period. No wonder the stocks carry a Zacks # 1 rank.

Olin shares have an A value score. The shares are currently trading at 7.17 times earnings, which is below the median level of last year. This is despite the 202.0% increase in the share price over the past year.

Budget Opinion Group AUTO

Avis Budget Group is a leading provider of rental vehicles in 180 countries in North America, Europe and Australasia. It has an average rental fleet of nearly 650,000 vehicles with over 11,000 car and truck rental locations around the world.

The Business – Services sector to which Avis belongs is in the top 35% of the industry ranked by Zacks. A position in the top 50% indicates a better outlook (as our historical data indicates), especially when paired with a Zacks # 1 rank, as is the case with Avis.

Like Stellantis and Olin, Avis has also suffered greatly from the pandemic, but it has not rebounded as quickly. This is because of the home operation that continued throughout the year. Now that markets are opening up and large parts of the economy are back to normal operations, Avis and its business services counterparts are seeing a strong rebound. This is reflected in the company’s revenue and profits this year.

Not only that. Avis also has a value score of A. Despite rising 618.6% in its share price over the past year, the shares are trading at 1.69 times sales, which is between its median value and its highlight of last year. The trend towards revised estimates is also extremely encouraging. For 2021, analysts increased their EPS estimate by $ 4.20 (29.7%)

Toll brothers TOL

Toll Brothers builds communities of detached and attached single-family homes; planned luxury residential resort style golf communities; and low-, medium- and high-rise urban communities, mainly on the land it develops and improves.

The Construction Products – Home Builders industry, to which Toll Brothers belongs, is among the top 32% of industries ranked by Zacks. The residential construction market is expected to remain one of the hottest until the middle of next year, when the inventory situation will largely normalize. In the meantime, home builders will be able to take advantage of high prices, which will however be somewhat offset by rising raw material costs.

The October quarter is the strongest for Toll Brothers while January is the weakest. Due to strong demand, Toll Brothers is experiencing very strong growth in turnover, except for seasonal variations. The same goes for earnings.

Zacks Rank # 2 (Buy) is one of those few companies that is expected to see double-digit growth this year and next. The EPS estimate for the year ending October 22 is up 1.6% over the past 30 days.

Toll Brothers shares have appreciated 40.1% over the past year. As it is currently trading at 7.22 times earnings, which is well below last year’s median level, stocks appear undervalued.

Eni E

Eni, based in Rome, Italy, is one of the world’s leading integrated energy players with operations in 43 countries.

Eni belongs to the Oil and Gas – Integrated – International industry, which is among the 11% of industries classified by Zacks. Coupled with the rank of Zacks No. 1 on Eni shares, this makes an attractive investment. But we can and must dig deeper.

So if we look at Eni’s operating results over the past five years, we see some sluggishness in 2018 and 2019, followed by a dip in the June 2020 quarter, when the whole world was off the roads. Oil and gas stocks are coming back very strongly this year with huge demand driving high prices. In addition, the force is expected to continue next year as well.

Revisions to estimates tell the whole story. While estimate revisions have been weaker for most stocks this quarter, Eni’s earnings estimates for 2021 have jumped 46 cents (17.5%) in the past 30 days. For 2022, Eni is currently expected to earn $ 3.74, an estimate that has jumped 33 cents (9.7%) in the past 30 days.

Eni shares have appreciated by 50.5% over the past year. They are currently trading at $ 7.83X, close to their annual low of 7.81X over the past year. These actions should therefore continue to increase.

Price performance over one month

Image source: Zacks Investment Research

5 actions in the process of doubling

Each was selected by a Zacks expert as the # 1 favorite stock to earn + 100% or more in 2021. Previous recommendations climbed + 143.0%, + 175.9%, + 498.3% and + 673.0%.

Most of the stock in this report is flying under Wall Street’s radar, which provides a great opportunity to get into the ground floor.

Today, discover these 5 potential circuits >>

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Avis Budget Group, Inc. (CAR): Free Inventory Analysis Report

Eni SpA (E): Free stock analysis report

Toll Brothers Inc. (TOL): Free Stock Analysis Report

Olin Corporation (OLN): Free Stock Analysis Report

Stellantis NV (STLA): free stock analysis report

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