Should Value Investors Buy These Consumer Discretionary Stocks?
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company value investors might notice is Discovery (DISCA). DISCA is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 9.87 right now. For comparison, its industry sports an average P/E of 22.98. Over the past 52 weeks, DISCA's Forward P/E has been as high as 25.17 and as low as 7.45, with a median of 12.51.
DISCA is also sporting a PEG ratio of 0.89. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. DISCA's industry has an average PEG of 1.72 right now. DISCA's PEG has been as high as 1.35 and as low as 0.52, with a median of 0.99, all within the past year.
Investors could also keep in mind iHeartMedia (IHRT), an Broadcast Radio and Television stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
iHeartMedia is currently trading with a Forward P/E ratio of 12.21 while its PEG ratio sits at 1.74. Both of the company's metrics compare favorably to its industry's average P/E of 22.98 and average PEG ratio of 1.72.
IHRT's price-to-earnings ratio has been as high as 23,999.66 and as low as -1,143.15, with a median of 41.21, while its PEG ratio has been as high as 3,428.52 and as low as -163.31, with a median of 5.89, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Discovery and iHeartMedia are likely undervalued currently. And when considering the strength of its earnings outlook, DISCA and IHRT sticks out as one of the market's strongest value stocks.
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Discovery, Inc. (DISCA) : Free Stock Analysis Report
iHeartMedia, Inc. (IHRT) : Free Stock Analysis Report
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