Best Value Stocks To Buy
Solid, expanding institutional buying among fundamentally strong companies with double-, triple- and even quadruple digit share prices makes up the I in CAN SLIM, IBD's seven-factor paradigm of successful investing in growth stocks.
best value stocks to buy
IBD Stock Screener filters cheap stocks that not only trade at $10 or less per share. Some also carry many of the key fundamental, technical and fund ownership quality traits routinely seen among the greatest stock market winners.
So, check the gap between a cheap stock's best bid and best ask prices, or the difference between what one investor is willing to pay and another is willing to sell. The smaller the gap between bid and ask prices, the less price slippage.
AEYE is truly a micro cap; it trades just 26,000 shares per day. So please take account the liquidity risk. On average, less than $200,000 worth of stock gets traded each day. It has a market value of $86 million and only 11.7 million shares outstanding.
In the week ended March 3, ARDX ranked in the top 10 among stocks sold short and trading under $10 a share on trading platform TradeZero; customers sold short a total 1,324 shares at an average 3.75 per share.
In late February, the stock cracked through the 15 price level for the first time since early 2008. Lately, it's getting some pushback. Yet LYTS has certainly acted as one of the best stocks since making IBD Stock Screener for companies with a top Composite Rating and trading under 10 a share.
LYTS sports a 98 IBD Composite Rating on a scale of 1 to 99. The stock also hosts a 12-month Relative Strength Rating of 98, next to the best possible. The SMR Rating, measuring sales, profit margins and return on equity, gets a notably bullish grade of B on a scale of A to E, according to IBD Stock Checkup.
In the meantime, event-organizing platform Eventbrite (EB) and Chinese video streaming service iQiyi (IQ) recently made the IBD Stock Screener for top stocks in the Composite Rating and trading under 10 a share. Both show wonderful growth in the top line in the past quarter or two and are reaping big profits. But IQ is deliver better stock action lately.
As illustrated in the chart below, 2022 highlighted substantial outperformance by value over growth. The iShares Russell 1000 Value ETF (IWD) ended the year down 10% compared to the iShares Russell 1000 Growth ETF (IWF), -30%.
From a purely fundamental perspective, value investing defines the premise of buying low and selling high, capitalizing on inexpensive price-to-earnings ratio, price-to-book, yield, and other metrics. As shown in the table below, there can be benefits to value investing in the short and long term, as highlighted by the one-year and three-year performance.
The strong momentum of both stocks, whose quarterly price performance is significantly outperforming their peers, showcases both stocks are trending higher. Each has an upward-sloping 200-day moving average, a great sign as we review their past earnings and approach Q4 earnings.
Although both companies have experienced some market fluctuations over the last year, their price returns have been strong. Laura Prieskorn, President and Chief Executive Officer of JXN, said it best,
Stay CALM! Cal-Maine Foods, Inc. is here to provide your comfort food needs to help ease the stress of historically high inflation! In fact, it could be one of the best food hedges against food inflation.
With continued tailwinds of limited supplies and uncharacteristically high egg costs, CALM continues to capitalize, results that have allowed shareholders to capitalize with an increasing dividend. Cal-Maine Foods goes ex-dividend, offering a 58.8% increase from its prior dividend, which offers one more reason to consider this value stock for a portfolio.
Amid a slowing economy and better-than-expected CPI figures, a potential turnaround for economies could see SMCI and our other stocks as tremendous value plays with growth prospects for the long term. As industries begin to stabilize and recession fears dissipate, each of the five stocks has been resilient in the face of market volatility in 2022 yet achieved significant traction and growth heading into the new year. Each of these picks has a strong cash position and is severely discounted. Consider each of these picks for your portfolio in 2023.
At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1988 it has more than doubled the S&P 500 with an average gain of +24.52% per year. These returns cover a period from January 1, 1988 through February 6, 2023. Zacks Rank stock-rating system returns are computed monthly based on the beginning of the month and end of the month Zacks Rank stock prices plus any dividends received during that particular month. A simple, equally-weighted average return of all Zacks Rank stocks is calculated to determine the monthly return. The monthly returns are then compounded to arrive at the annual return. Only Zacks Rank stocks included in Zacks hypothetical portfolios at the beginning of each month are included in the return calculations. Zacks Ranks stocks can, and often do, change throughout the month. Certain Zacks Rank stocks for which no month-end price was available, pricing information was not collected, or for certain other reasons have been excluded from these return calculations.
Given the economic headwinds and associated stock market fluctuations that are not likely to subside anytime soon, investors seem more inclined to invest in cheaper stocks. Against this backdrop, fundamentally strong value stocks HMC and NTCT might be wise additions today.
On February 28, 2023, HMC and LG Energy Solution held the official groundbreaking ceremony for a new joint venture EV battery plant over two million square feet in size, to be located in Fayette County, near Jeffersonville, Ohio. Batteries generated by the venture would ensure the successful launch of HMC EVs in North America and create high-value jobs in Ohio. This should benefit HMC in the near term.
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy.Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
2022 was a paradigm-shifting year for investors. Prior to 2022, growth stocks had been on a tremendous winning streak. The tech-heavy Nasdaq Composite index rose every single year between 2009 and 2021. Software, e-commerce and social media stocks seemed to have no ceiling. Last year, the tables turned. Formerly hot tech stocks turned ice cold, while many left-for-dead value stocks enjoyed strong outperformance. With interest rates still at a relatively high level and the world economy remaining unsettled, 2023 could be another volatile year for the market. This could make value stocks a good safe haven once again in coming months. These 10 value stocks remain cheap, with all trading for 15 times forward earnings or less. Solid companies bought at a good price should serve investors well regardless of where the market goes in 2023.
For this to work, either the company remains cheap and goes on to spend money on huge dividends/buybacks year after year, or the company eventually gets re-valued at a more appropriate higher valuation as the market realizes its previous short-sighted mistake.
A good example of a historically successful value stock is Altria, the parent company of Philip Morris USA. When evidence started to come out about how unhealthy smoking was, and smoking rates began dwindling, investors assumed that cigarette makers would struggle, and thus gave them low valuations. The fundamentals of those companies remained surprisingly strong, though.
This, ironically, gave many cigarette stocks outrageously good returns because the stocks had much higher sustainable dividend yields than they should have had based on their fundamentals, so investors that kept receiving and reinvesting their dividends did very well. The companies themselves also reinvested some earnings to buy back super-cheap shares and boost their earnings-per-share and dividend-per-share metrics.
The problem is that now investors know that value stocks historically outperform most other factors, so humans (and the machines they program) can easily go around buying the cheapest value stocks on the market (specifically the stocks with the lowest price-to-earnings or price-to-book ratios), which drives up their valuations and potentially eliminates their alpha.
Likewise, many growth stocks have been disrupting value stocks. Some of the lowest-valued stocks today are banks, asset managers, retailers, fossil fuel companies, and so forth. Meanwhile, growth stocks like Amazon, fintech companies, and renewable energy companies are trying to take their lunch, and in some cases succeeding.
The following chart shows the Russell 1000 Value Index divided by the Russell 1000 Growth Index. When the line was going up, it means value was outperforming. When the line was going down, it means growth was outperforming:
From 1980 to 1988, value mildly outperformed growth. From 1988 to 2000, growth mildly outperformed value. From 2000 to 2007, value crushed growth. From 2007 to present, growth has moderately outperformed value.
Likewise, when people get excited about growth stocks, they can reach such crazy valuations that they have nowhere to go but down because they are totally unjustified by their fundamentals, like in the year 2000.
In addition, there are disruptive forces at play due to new technology or other aspects that allow some periods to see a greater fundamental rise of growth stocks than others. This past decade has seen a gargantuan rise of tech giants, with Apple inventing the iPhone in 2007, Alphabet taking over the internet, Amazon dominating the retail and cloud spaces, and Microsoft continuing to do well in enterprise and cloud platforms. This has been a more fundamentally-driven period of outperformance for growth stocks than the run-up to the dotcom bubble was. 041b061a72