Yahoo Finance Zacks.com featured highlights include Aptiv, B2Gold, Sylvamo, Tri Pointe Homes and Brinker International
For Immediate Release
Chicago, IL – May 21, 2024 – Stocks in this week’s article are Aptiv plc APTV, B2Gold Corp. BTG, Sylvamo Corp. SLVM, Tri Pointe Homes TPH and Brinker International EAT.
5 Best PEG-Based Value Picks to Add to Your Portfolio Now
In a market dealing with external shocks, value investing is fast gaining popularity. The success of value investors like Warren Buffett underscores this. Buffett and his business partner, Charlie Munger, managed to register a 19.8% CAGR for Berkshire Hathaway from 1965 through 2023. This compares favorably with a 10.2% rise of the S&P 500 Index during the same period.
Several other stocks, which have surged significantly in the recent past, have shown the overwhelming success of this pure-play investment strategy. Here, we discuss five such stocks — Aptiv plc, B2Gold Corp., Sylvamo Corp., Tri Pointe Homes and Brinker International.
More on Value Investing
While searching for a suitable investment option, value investors with a varied risk appetite are unlikely to consider price/earnings to growth (PEG) ratio among several other popular metrics like price/earnings (P/E), price/sales (P/S) or price/book value (P/B).
This is because they often find this ratio complicated, considering the limitations in calculating a stock's future earnings growth potential. Yardsticks, such as dividend yield, P/E or P/B, are commonly used to single out stocks trading at a discount.
However, while not taking into account the growth potential of a stock, these ratios might end up convincing us to invest in stocks that are at a discount just because of their poor show. This might often lead to “value traps” — a situation when these value picks start to underperform over the long run as temporary problems, which, once pulled down the share price, turn out to be persistent.
In such a case, even if you buy a stock at less than its fair value, you might still end up paying more. And here comes the importance of this not-so-popular but crucial value investing metric, the PEG ratio.
The PEG ratio is defined as (Price/ Earnings)/Earnings Growth Rate
A low PEG ratio is always better for value investors.
While P/E alone fails to identify a true value stock, PEG helps find the intrinsic value of a stock.
There are some drawbacks to using the PEG ratio. It doesn’t consider the very common situation of changing growth rates, such as the forecast of the first three years at a very high growth rate, followed by a sustainable but lower growth rate over the long term.
Hence, PEG-based investing can turn out to be even more rewarding if some other relevant parameters are also taken into consideration.
Here are five out of 17 stocks that qualified the screening:
Aptiv: This leading global technology and mobility company mainly serves the automotive sector. It is a designer and manufacturer of vehicle components as well as a provider of electrical, electronic and safety technology solutions to the global automotive market. The company is well-positioned to leverage growing electrification, connectivity and autonomy trends in the rapidly evolving automotive sector.
Aptiv has a long-term expected growth rate of 16.4%. Aptiv currently carries a Zacks Rank of 1 and has a Value Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
B2Gold: Vancouver-based B2Gold is a gold producer with three operational mines (one each in Mali, Namibia, Philippines). So far in 2024, gold price has increased 11.3%, reaching an all-time high in March 2024. Currently, gold price is around $2,295 per ounce. This pickup in the price of gold is likely to improve B2Gold’s results in the upcoming quarters.
B2Gold currently holds a Zacks Rank #1 and has a Value Score of A. B2Gold also has an impressive five-year historical growth rate of 18.9%.
Sylvamo: It produces and markets uncoated freesheet for cut size, offset paper and pulp. The company has mills in Europe, Latin America and North America. Of late, while uncoated freesheet conditions are getting better, the company is experiencing improved order books, resulting in less economic downtime.
Apart from a discounted PEG and P/E, Sylvamo currently has a Zacks Rank #1 and a Value Score of A. Sylvamo has a long-term expected growth rate of 29.9%.
Tri Pointe Homes: The company engages in the design, construction, and sale of single-family attached and detached homes in the United States. Tri Pointe Homes currently focuses on the strategic vision of building scale within existing markets while also driving organic growth where value-enhancing market opportunities exist.
Tri Pointe Homes has an impressive long-term historical growth rate of 16.5%. Tri Pointe Homes stock currently has a Value Score of B and a Zacks Rank of 1.
Brinker: It owns, operates, develops and franchises various restaurants under Chili’s Grill & Bar (Chili’s) and Maggiano’s Little Italy (Maggiano’s) brands. Brinker remains steadfast in its goal to drive traffic and revenues through a range of sales-building initiatives such as streamlining of menu and its innovation, strengthening its value proposition, better food presentation, advertising campaigns, kitchen system optimization and introduction of better service platform.
Apart from a discounted PEG and P/E, Brinker currently has a Zacks Rank #1 and a Value Score of B. Brinker has a long-term expected growth rate of 18.9%.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
For the rest of this Screen of the Week article please visit Zacks.com at:
https://www.zacks.com/stock/news/2275868/5-best-peg-based-value-picks-to-add-to-your-portfolio-now
Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: https://www.zacks.com/
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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
Brinker International, Inc. (EAT) : Free Stock Analysis Report
Tri Pointe Homes Inc. (TPH) : Free Stock Analysis Report
B2Gold Corp (BTG) : Free Stock Analysis Report
Aptiv PLC (APTV) : Free Stock Analysis Report
Sylvamo Corporation (SLVM) : Free Stock Analysis Report
