Value investing is for investors looking to buy stocks whose value is lower than the intrinsic value. Hence, these investors are always on the lookout for stocks with low price-to-earnings (P/E) ratio or high dividend yield. On the flip side, growth investors focus on stocks with higher P/E ratio and industries with strong momentum.
In recent years, growth stocks have stolen the thunder from value stocks. But the tide seems to be turning, as the outperformance of such growth stocks forms the basis of an argument which tend to favor the value stocks rising to prominence in the near term.
The Federal Reserve’s recent announcement of a possibility of raising the interest rates, and the consistent improvement of the labor market has not only strengthened the case for interest rate hike but has also eliminated the fears over the health of the U.S. economy.
However, it is a difficult task for the investors to zero in on the stocks that offer great value despite trading at a low price at the moment. Given the stark difference between value investing and growth investing, taking a prudent investment decision might appear to be a daunting task. An investor needs to use the right tools and metrics to select such stocks which are currently trading below their intrinsic value and to invest in those stocks before they’re discovered by the market.
This is where our proven Zacks Rank system comes to the rescue. Using our proven methodology, investors can not only identify the attractive picks but also ascertain the industries which might turn out to be value accretive, going ahead.
The attractiveness of a stock as an investment option is confirmed by its Value Style Score and the Growth Style Score of “A” (or “B”). Our research shows that stocks with Style Scores of “A” or “B” when combined with a Zacks Rank #1 (Strong Buy) or #2 (Buy) offer the best upside potential.
Based on the above measures, we have shortlisted five stocks sporting a Zacks Rank #1 (Strong Buy) and having Value Score and Growth Score of “A”.
The Chemours Company (CC - Snapshot Report) headquartered in Wilmington, DE, deals in chemical business. The company’s operations consist of Titanium Technologies, Fluoroproducts and Chemical Solutions.
Cooper-Standard Holdings Inc. (CPS - Snapshot Report) was established in 1960 and has is headquartered in Novi, MI. The company operates as a supplier of systems and components for the automotive industry. Its products include sealing and trim, fuel and brake delivery, fluid transfer, thermal and emissions and anti-vibration systems.
Ducommun Inc. (DCO - Snapshot Report) , headquartered in Carson, CA, manufactures components and assemblies for domestic and foreign commercial and military aircraft and space programs.
Horizon Global Corporation (HZN -Snapshot Report) , headquartered in Troy, MI, is a designer, manufacturer and distributor of towing, trailering, cargo management and accessory products for original equipment, aftermarket and retail customers.
The Dixie Group, Inc. (DXYN - Snapshot Report) was founded in 1920 and is based in Dalton, GA. The company is a leading carpet and rug manufacturer and supplier to higher-end residential and commercial customers serviced by Masland Carpets and Fabrica International, to consumers through major retailers under the Bretlin, Globaltex and Alliance Mills brands and to the factory-built housing and recreational vehicle markets through Carriage Carpets
by Zacks Equity Research
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