3 Zacks Rank #1s with Growth AND Value

It’s tough to get growth and value in the same investment during normal times, but it was practically impossible when stocks were plunging during the worst of the pandemic.

But the indices have had a remarkable bounce-back since late March, and now its time to start looking for stocks with big growth rates and low valuations.

The Growth & Value Stocks Plus Zacks Rank #1 screen will help you find the best of both worlds. Below are three stocks that recently passed the test:

eBay (EBAY)

If you’re looking for a rare 1979 Boba Fett action figure to complete your Star Wars collection, or a Beatles vinyl album signed by Paul McCartney and the drummer guy, or a vintage toaster for your retro kitchen redesign… then you don’t go to Amazon, Target or Wal-Mart.

You go to eBay (EBAY)!

This online auction site is an ecommerce pioneer in its own right, even though those other names take up most of the oxygen in the space these days. Nevertheless, EBAY has been streamlining its operations in recent years to better focus on the great shift in retail toward online shopping.

Therefore, when the coronavirus hit and the ‘stay at home’ economy was born, the stock was able to take full advantage and is now up more than 82% from the coronavirus low on March 23.

In fact, the company raised its second-quarter 2020 guidance! It now expects revenues between $2.75 billion and $2.8 billion, instead of its previous range of $2.38 billion to $2.48 billion. Most retailers would count themselves lucky if they just kept their outlooks steady in this environment.  

In the first quarter, EBAY reported earnings per share of 77 cents, which beat the Zacks Consensus Estimate by more than 4% for its fifth straight quarter of outperformance. Revenue of $2.4 billion also topped our expectations, as global active buyers reached 174 million.

The past 30 days have seen earnings estimates move sharply higher. Analysts now expect $3.45 for this year, which is up 11.7% in that time. Meanwhile, the Zacks Consensus Estimate for next year has moved higher by 8% to $3.76.

Therefore, analysts currently expect profit growth of 9% for 2021 over 2020, which suggests that EBAY will remain a player in the new retail environment even when the coronavirus is a thing of the past.

Big Lots (BIG)

If a stock is up 195% since the coronavirus low on March 23 and its NOT a technology company… then you can probably guess the space.

Retail – Discount Stores is in the top 15% of the Zacks Industry Rank as many consumers have been frugal with their money during this difficult time. It includes heavy-hitters like Costco and Target. But the only name from this area with a Zacks Rank #1 (Strong Buy) is Big Lots (BIG).

This broad-line closeout retailer has beaten the Zacks Consensus Estimate in five of the last six quarters, but the most recent report was something else. Earnings per share of $1.26 not only improved 37% from the previous year, but also topped our expectations by more than 207%!

Net sales of $1.44 billion improved 11.1% and also exceeded the Zacks Consensus Estimate. Same-store sales rose 10.3%.

BIG’s transformation initiative dubbed Operation North Star appears to be working, as it strives to drive top-line growth, cost containment and enhancement in systems and infrastructure.

The company withdrew its full-year guidance due to you-know-what, but said it got off to a strong start in the second quarter. Earnings per share are forecasted between 65 cents and 80 cents for the quarter. The response from analysts were sharp revisions higher for the quarter, this year and next.

The Zacks Consensus Estimate for this fiscal year jumped over 52% over the past 30 days to $4.39. Expectations for next fiscal year (ending January 2022) advanced 21.4% in that time to $4.31.

No wonder it’s a Zacks Rank #1 (Strong Buy)!

Kroger (KR)

Want to hear something funny? On June 11, when the S&P plunged by nearly 6%, the only stock in the index that finished in the green was Kroger (KR).

However, when the company reported solid beats on the top and bottom lines yesterday, the supermarket giant dipped by more than 3%.

Nobody ever said the market had to make sense!

What makes perfect sense, though, is that business at Kroger boomed in the first quarter during this pandemic. Earnings per share of $1.22 beat the Zacks Consensus Estimate of $1.12 by 8.9%.

Total sales of nearly $41.6 billion improved 11.5% from last year and also topped our expectation of $40.9 billion. Most impressively, same-store sales soared by 19%. In more normal times, a reading of 2% would be considered pretty good. And digital sales surged by 92%.

The market most likely yawned at this data because KR couldn’t provide a new 2020 guidance amid all the uncertainty surrounding the coronavirus. The company does expect to exceed its outlook from its April 1 business update, but doesn’t feel comfortable getting too specific.  

The market apparently wanted more, but analysts are still expecting big things from Kroger. Earnings estimates for this fiscal year have improved 8% in the past 30 days to $2.69. Expectations for next year (ending January 2022) are up 1.2% to $2.51.

That year-over-year decline in profit growth reflects concerns that KR won’t able to keep this momentum going as the coronavirus fades and the economy reopens. However, the company is still seeing a surge in same-store sales and digital sales to start the second quarter.

5 Stocks to Soar Past the Pandemic:

In addition to the companies you learned about above, we invite you to learn about 5 cutting-edge stocks that could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of the decade.

See the 5 high-tech stocks now >>

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
 
The Kroger Co. (KR) : Free Stock Analysis Report
 
eBay Inc. (EBAY) : Free Stock Analysis Report
 
Big Lots, Inc. (BIG) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research