Over a year ago, when the stock market was trending lower, we ran a Five for Friday screen looking for value stocks that might cushion the blow if stocks were to continue to fall further.
A reader recently asked if we could update the screen. His logic is that value stocks have underperformed. Per the request: “I fear the stock market may have peaked and could be heading back toward last year’s lows.”
Due to their more conservative nature and established product lines, value stocks often outperform the market in bear markets and recessions. Technically, the market has weakened recently but still looks strong. That said, the headwinds of higher interest rates are steadily increasing. It may be a little early, but it’s never too early to have a roster of value stocks to protect if our reader’s concern proves correct.
As you will see below, the scan results in four deep-value stocks.
Screen Criteria
- Price to Sales <1
- Price to Book <2
- Price to Cash Flow <20
- PEG Ratio <1
- Forward Price to Earnings <20
- Zacks Rank =1
- Zacks Value score=1
Scan Results
Company Summaries (Corporate Summaries Courtesy of Zacks)
Gee Group (JOB)
Teekay Tankers (TNK)
Toll Brothers (TOL)
Urban Outfitters (URBN)
Five for Friday
Five for Friday uses stock screens to produce five stocks that we expect will outperform if a particular investment theme plays out in the future. Investment themes may be relevant to the current or expected market, industry and/or economic trends. Investment themes may not always represent our current forecast.
Disclosure
This report is not a recommendation to buy or sell the named securities. We intend to elicit ideas about stocks meeting specific criteria and investment themes. Please read our disclosures carefully and do your own research before investing.
Michael Lebowitz, CFA is an Investment Analyst and Portfolio Manager for RIA Advisors. specializing in macroeconomic research, valuations, asset allocation, and risk management. RIA Contributing Editor and Research Director. CFA is an Investment Analyst and Portfolio Manager; Co-founder of 720 Global Research.
Follow Michael on Twitter or go to 720global.com for more research and analysis.
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