For immediate release
Chicago, IL – May 31, 2022 – Today’s Zacks Investment Ideas feature highlights Huntsman Corp. HUN, Pangea Logistics Solutions PANL and Avnet AVT.
3 low P/E stocks investors should keep on their radar
Yesterday’s price action in the market was stellar and green was prevalent. It was quite a giveaway, as investors have been hit after the fact throughout 2022 so far.
The Fed hopes to achieve a “soft landing” with interest rate hikes without tipping the US economy into recession. This will be difficult to achieve, but the Fed is optimistic that it can be achieved.
Additionally, it should be noted that the Fed may be flexible enough to change its course of action as more economic data arrives throughout 2022.
However, the market rebound may have already begun; the S&P 500 is on track for its first green weekly close after seven straight weeks in the red. The three-year chart below shows the S&P 500 trading at levels not seen since early March 2021, bouncing beautifully off those levels so far.
Additionally, the S&P 500 forward earnings multiple currently sits at 18.1X, well below 2020 highs of 28.6X, and is well below the median of 19.9X over the past five years. . Moreover, it is the lowest we have seen since March 2020.
The bears might be tired, which is something everyone can be happy about. Still, investors need to have the right stocks in their portfolios.
One of the best ways for investors to find these winners is through the Zacks Rank and Zacks Premium screens, such as the Zacks High Rank Value screen.
Generally, value investors look for stocks with low P/E and low P/B. Unfortunately, not all value stocks are real bargains when you get down to business.
Using the Zacks High Rank Value screen, we can filter out value stocks to only those with positive revisions in earnings estimates – the screen only provides Zacks Rank #1 (Strong Buy) or #2 (Buy) stocks .
Huntsman Corp., Pangea Logistics Solutions and Avnet are three stocks that fit the screen criteria. Let’s see why these three stocks are solid value bets.
Shares of Huntsman Corp. have been a bright spot in a dark market, providing investors with a strong 5.6% year-to-date return and easily outpacing the performance of the S&P 500. The company is a Zacks Rank #1 (Strong Buy) with an overall VGM score of B.
Valuation metrics are very reasonable. The company’s forward earnings multiple sits well at 8.3X, a far cry from 2020 highs of 75.3X, and well below its median of 10.6X over the past five years. Additionally, the value represents a steep 64% discount to the S&P 500’s forward price-to-earnings ratio of 18.1X.
Analysts have raised their earnings outlook across the board over the past 60 days. For the upcoming quarter, the $1.12 per share estimate shows a significant 30% growth in net income over the prior year quarter.
Looking ahead, the current year EPS estimate sits at $4.41, reflecting a notable 25% year-over-year earnings growth. Additionally, for FY23, the Zacks consensus estimate of $4.95 shows additional net income growth of 12.5%.
Additionally, the company has an annual dividend yield of 2.35% with a sustainable payout ratio of 21% of earnings. HUN has increased its dividend three times in the past five years, giving it an annualized dividend growth rate of 7.8%.
Pangea Logistics Solutions
Shares of Pangea Logistics Solutions have been soaring year to date, delivering investors a massive 72% return that absolutely crushed the performance of the S&P 500. PANL is a Zacks Rank #1 (Strong Buy) with a score Overall VGM of an A.
On the valuation side, the company is posting a forward earnings multiple of 3.9X, not even close to 2020 highs of 61.3X and well below the 5.4X median over the past five years. Additionally, the value represents a resounding 78% discount to the forward P/E ratio of the S&P 500.
Over the past 60 days, analysts have positively revised their estimates across all periods with a 100% revision agreement. The next quarterly EPS estimate sits at $0.37, recording 28% growth in earnings over the prior year quarter.
Additionally, Zacks’ consensus estimate sits at $1.67 per share for the current fiscal year, showing an 18% year-over-year net income expansion. For FY23, the annual EPS estimate of $2.12 reflects further earnings growth of a significant 27%.
PANL has an annual dividend yield of 3.04% with a very sustainable payout ratio of 12%. Additionally, the company has increased its dividend three times in the past five years.
Avnet shares have been strong year-to-date, easily outperforming the S&P 500 by racking up a hefty 17% return. AVT is a Zacks Rank #1 (Strong Buy) with an overall VGM score of B.
The company is posting a forward P/E ratio of 6.9X, a fraction of its 2020 high of 22.7X and notably below its median of 11.9X over the past five years. Additionally, the stock is trading at a steep 61% discount to the S&P 500 forward P/E ratio.
Like PANL and HUN, analysts raised their earnings outlook across the board. Zacks’ consensus estimate for the next quarter of $1.96 per share reflects very strong net income growth of 75% from the year-ago quarter.
For the current fiscal year, the $6.83 per share estimate represents massive triple-digit earnings growth of 152% year-over-year. Additionally, for FY23, earnings are expected to climb a respectable 2.4% year-over-year.
For investors with an appetite for income, Avnet has that covered with its annual dividend yield of 2.19% with a sustainable payout ratio of 17% of earnings. The company has increased its dividend six times in the past five years, giving it a five-year annualized dividend growth rate of 6.3%.
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Past performance is not indicative of future results. The potential for loss is inherent in any investment. This document is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold any security. No recommendation or advice is given as to whether any investment is suitable for any particular investor. It should not be assumed that investments in the securities, companies, sectors or markets identified and described have been or will be profitable. All information is current as of the date hereof and is subject to change without notice. The views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management of securities. These returns come from hypothetical portfolios composed of stocks with Zacks Rank = 1 that have been rebalanced monthly without transaction fees. These are not the returns of actual stock portfolios. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for more information on the performance figures displayed in this press release.
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Avnet, Inc. (AVT): Free Stock Analysis Report
Huntsman Corporation (HUN): Free Stock Analysis Report
Pangea Logistics Solutions Ltd. (PANL): Free Stock Analysis Report
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