Yahoo Finance What Industries Have the Most Classic Value Stocks Right Now?
(0:45) - Big Takeaways From The Warren Buffett 3 Hour Interview
(6:10) - Stock Screener To Find Strong Value Stocks Right Now: Tracey’s Top Stock Picks
(22:30) - Episode Roundup: ABG, GM, ERJ, VLO, TOL
Podcast@Zacks.com
Welcome to Episode #325 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.
In Apr 2023, Warren Buffett sat down with CNBC’s Becky Quick, for a wide-ranging, 3-hour interview in Japan. It covered topics from his oil investments to what he thinks about Bitcoin to his insights into the banking crisis.
Due to the pandemic, it has been over 3 years since Warren Buffett and Becky Quick were in the same room for a far reaching, one-on-one interview. He gave his usual folksy advice, such as that investors should focus on the business, not on the economy. But his investing tidbits really never get old.
Where are the Top Classic Value Stocks Right Now?
Seeing him on the interview, Tracey decided to screen for value stocks that were dirt cheap across numerous value metrics, including P/E, P/S, P/B, PEG and P/CF ratio along with the Zacks Rank and high Value Style Score.
The screen returned 16 stocks.
What industries were represented? Energy, foreign banks and autos were popular. Here’s 5 of those 16.
5 Top Classic Value Stocks for 2023
1. Asbury Automotive Group (ABG)
Asbury Automotive Group is an auto retailer with a $4.4 billion market cap.
Analysts expect 2022 to be the year of “peak” earnings for the auto retailers. Asbury Automotive Group’s earnings are expected to fall 19.2% in 2023.
Shares of Asbury Automotive Group are up 14.5% year-to-date. But shares are still dirt cheap with a forward P/E of just 6.8.
Should you be buying Asbury Automotive Group even with falling earnings?
2. General Motors Corp. (GM)
General Motors has long been a value stock but in 2023 it remains cheap. It has a forward P/E of 5.7 and a P/S ratio of just 0.3.
However, GM’s earnings are expected to fall 18.2% to $6.21 from $7.59 last year.
Is General Motors a value or a trap?
3. Embraer S.A. (ERJ)
Embraer is a Brazilian airplane manufacturer. It makes commercial and executive jets. In 2022, Embraer delivered 159 jets, up 12.7% from 2021. It expects to deliver 65 to 70 commercial jets and 120 to 130 executive jets in 2023.
Shares of Embraer have been red-hot in 2023, soaring 50%. But earnings are also red-hot, with analysts expecting earnings to rise 433% to $1.12 this year from $0.21 in 2022.
It’s still cheap, with a PEG ratio of 0.9 and a P/S ratio of 0.7.
Should Embraer be on your short list?
4. Valero Energy (VLO)
Valero is a large cap U.S. oil refiner. It’s shareholder friendly and pays a dividend, yielding 3.1%.
Earnings for Valero are expected to fall 14.4% in 2023 to $24.95 from $29.16 last year but the analysts have recently gotten bullish with 4 estimates revised higher in the last week.
Valero is a Zacks Rank #2 (Buy) stock but it has the highest Style Score of A in Value, Growth and Momentum. Having all three style scores of A is rare.
Valero is cheap, with a forward P/E of 5.5 and a P/S ratio of 0.3.
Should value investors be taking a look at Valero Energy?
5. Toll Brothers (TOL)
Toll Brothers is a luxury new home builder with a market cap of $6.6 billion. Shares are up 19.7% year-to-date even though Toll Brothers earnings are expected to fall in fiscal 2023 and fiscal 2024.
Toll Brothers shares are cheap, with a forward P/E of 6.9 and a PEG ratio of 0.6.
Should investors be dipping their toes back into the home builder stocks like Toll Brothers or are they value traps?
What Else do Value Investors Need to Know About Classic Value Stocks in 2023?
Listen to this week’s podcast to find out.
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
Embraer-Empresa Brasileira de Aeronautica (ERJ) : Free Stock Analysis Report
Valero Energy Corporation (VLO) : Free Stock Analysis Report
General Motors Company (GM) : Free Stock Analysis Report
Toll Brothers Inc. (TOL) : Free Stock Analysis Report
Asbury Automotive Group, Inc. (ABG) : Free Stock Analysis Report
