The Most Basic Value Stock Screen Ever

• (0:45) - Is Value Officially Back In Business?
• (6:50) - Learning The Value Investing Basics: Finding Strong Companies
• (13:00) - Tracey’s Top Stock Picks: Stock Screener Criteria
• (30:20) - Episode Roundup: PBF, CAR, DINO, RDN, UPLD
•             Podcast@Zacks.com

Welcome to Episode #305 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.

Did you recently decide to try out value investing, as growth wasn’t working? Did you find Tracey’s podcast on Spotify or Apple Podcast and thought you’d check out what value investing was all about?

She sticks to the basics this week, using a basic stock screen to find 5 value stocks.

The Most Basic Value Stock Screen Ever

There are many stock fundamentals that a value investor could use to find value stocks. But the easiest one is the price-to-earnings ratio. The “P/E ratio” is simply price divided by earnings.

Usually, a P/E ratio under 15 would find you cheap stocks. But with so many value stocks this year, Tracey decided to go even cheaper to 10 or lower. The lower it is, the cheaper the stock.

She also added the Zacks Rank of #1 (Strong Buy) and #2 (Buy).

This screen gave too many stocks, however. It returned 217 possibilities. Tracey lowered the P/E to 5, which is incredibly low, and still got 48 stocks.

Remember, a super low P/E may be a warning sign about a company. Be sure to do your research and find out why the Street is ignoring the company.

5 Dirt Cheap Stocks

1.       PBF Energy PBF

PBF Energy is an independent refiner with operations in California, Delaware, Louisiana, New Jersey and Ohio.

PBF Energy is expected to see earnings soar 960.8% in 2022. The Zacks Consensus Estimate is looking for $21.52 this year versus a loss of $2.50 last year.

PBF Energy recently reinstated its quarterly dividend, which is now yielding 1.7%. Shares have soared 249% year-to-date but it’s still dirt cheap, with a forward P/E of just 2.2.

Is it too late to get into PBF Energy?

2.       Avis Budget Group CAR

Avis Budget Group has been riding high during the pandemic as leisure travel has soared.

Shares of Avis Budget Group have jumped 622% in the last 2 years as it became one of the famous meme stocks. In 2022, it’s up just 8%.

Earnings are expected to rise 130% in 2022 but cool off in 2023, falling 52%. Yet shares of Avis Budget Group are dirt cheap, with a forward P/E of just 4.5.

Should Avis Budget Group still be on your short list?

3.       HF Sinclair Corp. DINO

HF Sinclair is another energy company, which was formed in Mar 2022 when HollyFrontier merged with Sinclair. The company has refining, midstream, lubricants, renewables, and marketing. It operates 1300 Sinclair service stations.

Shares of HF Sinclair are up 85% year-to-date but earnings are expected to rise 846% this year.

HF Sinclair is still cheap, with a forward P/E of 4.4.

Is it too late to buy HF Sinclair?

4.       Radian Group RDN

Radian Group operates in the mortgage and real estate industry. It recently announced layoffs in Pennsylvania, including at its headquarters, due to challenges in the mortgage industry with the Fed continuing to raise rates.

Shares are down 6% year-to-date and remain cheap, at a forward P/E of only 4.4.

Radian Group pays a dividend, currently yielding 3.9%.

Is the mortgage industry too risky to invest in in 2022?

5.       Upland Software UPLD

Upland Software is a small-cap cloud-based software company. Shares of Upland Software are down 64% year-to-date and have plunged 86% over the last 2 years.

Earnings are expected to fall 15% in 2022 to $1.85 from $2.18 last year. But earnings are expected to rise just 1.9% next year, to $1.89.

Upland is certainly cheap, with a forward P/E of just 3.8.

With software stocks still out of favor, should value investors stay on the sidelines?

What Else Should You Know About the Basic Stock Screening?

Tune into this week’s podcast to find out.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.