For Immediate Release
Chicago, IL – June 29, 2022 – Stocks in this week’s article are Lithia Motors, Inc. LAD, Signet Jewelers Ltd. SIG, Celestica Inc. CLS and Vishay Intertechnology, Inc. VSH.
Pick These 4 Low PC/F Stocks to Uplift Your Portfolio
Value style is considered one of the best practices when it comes to picking stocks. Value investing is essentially about selecting stocks that are fundamentally sound but have been beaten down by some external factors. Such stocks are poised to bounce back as and when investors recognize the inherent value of companies. Certainly, the value investment strategy best suits investors with a long-term horizon.
There are different valuation metrics to determine a stock's inherent strength. Still, a random selection of a ratio cannot serve your purpose if you want a realistic assessment of a company's financial position. For this, we would suggest the Price to Cash Flow (or P/CF) ratio as one of the key metrics.
This metric evaluates the market price of a stock relative to the amount of cash flow that the company is generating on a per-share basis – the lower the number, the better. One of the important factors that make P/CF a highly dependable metric is that operating cash flow adds back non-cash charges such as depreciation and amortization to net income, truly diagnosing a company's financial health.
Analysts caution that a company's earnings are subject to accounting estimates and management manipulation. However, cash flow is reliable. Net cash flow unveils how much money a company is actually generating and how effectively management is deploying the same.
Positive cash flow indicates an increase in a company's liquid assets. It gives the company the means to settle debt, meet its expenses, reinvest in its business, endure downturns and finally pay back its shareholders. Negative cash flow implies a decline in the company's liquidity, which in turn lowers its flexibility to support these moves.
However, solely based on the P/CF metric, an investment decision may not fetch the desired results. To identify stocks trading at a discount, you should expand your search criteria and consider price-to-book ratio, price-to-earnings ratio, and price-to-sales ratio. Adding a favorable Zacks Rank and a Value Score of A or B to your search criteria should lead to even better results as these eliminate the chance of falling into a value trap.
The Bargain Hunting Strategy
Here are four of the 11 stocks that qualified the screening:
Lithia Motors, Inc., which operates as an automotive retailer in the United States, has a Zacks Rank #1 and an expected EPS growth rate of 6.2% for three-five years. The company has a trailing four-quarter earnings surprise of 30.5%, on average. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lithia Motors's current financial year sales and EPS suggests growth of 29.9% and 19.5%, respectively, from the year-ago period. Lithia Motors has a Value Score of A. Shares of LAD have declined 13.8% in the past year.
Signet Jewelers Ltd., the world's largest retailer of diamond jewelry, sports a Zacks Rank #1. It has an expected EPS growth rate of 8% for three-five years. The company has a trailing four-quarter earnings surprise of 65.5%, on average.
The Zacks Consensus Estimate for Signet's current financial-year sales and EPS suggests growth of 5.1% and 1.6%, respectively, from the year-ago period. SIG has a Value Score of A. The stock has fallen 22.6% in the past year.
Celestica Inc., a leader in design, manufacturing and supply-chain solutions for the world's most innovative companies, carries a Zacks Rank #2. It has an expected EPS growth rate of 15.4% for three-five years. The company has a trailing four-quarter earnings surprise of 12.6%, on average.
The Zacks Consensus Estimate for Celestica's current financial-year sales and EPS suggests growth of 16.5% and 29.2%, respectively, from the year-ago period. CLS has a Value Score of A. The stock has advanced 28.5% in the past year.
Vishay Intertechnology, Inc., which manufactures and supplies discrete semiconductors and passive electronic components, has a Zacks Rank #2 and an expected EPS growth rate of 22.7% for three-five years. The company has a trailing four-quarter earnings surprise of 5%, on average.
The Zacks Consensus Estimate for VSH's current financial year sales and EPS suggests growth of 6.8% and 15.5%, respectively, from the year-ago period. Vishay Intertechnology has a Value Score of A. Shares of VSH have declined 18.2% in the past year.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and backtest them first before taking the investment plunge.
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/1944889/pick-these-4-low-pcf-stocks-to-uplift-your-portfolio
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Follow us on Twitter: https://www.twitter.com/zacksresearch
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
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/performancefor 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
Signet Jewelers Limited (SIG) : Free Stock Analysis Report
Celestica, Inc. (CLS) : Free Stock Analysis Report
Lithia Motors, Inc. (LAD) : Free Stock Analysis Report
Vishay Intertechnology, Inc. (VSH) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research