Zacks Investment Research #1 Rank (strong buy) stocks have consistently outperformed the S&P 500 since 1988. Here are some their recommended Value stock picks with a #1 ranking. This list is updated daily.
Ancestry.com Inc. - Value
Fri, 18 May 2012
It's unusual for the fast growing Internet stocks to also be value plays. But Ancestry.com Inc. (ACOM) is expected to have double digit earnings growth in 2012 and 2013 and this Zacks #2 Rank (Buy) has a forward P/E of 14.
Ancestry.com operates the world's largest online family history resource web site with 1.9 million paying subscribers. The company has 10 billion records.
Its users have created more than 34 million family trees with about 4 billion profiles.
Stock Plunged After NBC Cancelled TV Show
On May 13, NBC announced it would not renew "Who Do You Think You Are?" for a fourth season. The show follows celebrities as they search for their family history, often using Ancestry.com's site along the way.
It was a great promo for those interested in finding their own family history.
Investors sold off shares on the news, although Ancestry.com said, in a press release, that it was exploring other distribution options.
Shares Are a Value
With the recent sell-off, Ancestry.com has gotten even cheaper.
In addition to a P/E under 15, which is the cut-off I use for value, it also has a price-to-book ratio just on the edge of value at 3.0. A P/B under 3.0 usually indicates value.
Investors also get other solid metrics, including a 1-year return on equity of (ROE) of 21%.
Ancestry.com Continued Its Earnings Surprise Streak In Q1
Ancestry.com is more than just a value stock, however. On Apr 25, the company reported its first quarter results and surprised on the Zacks Consensus for the 10th time in a row.
Ancestry.com has put together quite an earnings surprise streak. It has not missed since it went public in 2009.
Earnings per share were 30 cents easily crushing the Zacks Consensus by 30%.
Revenue rose 19% to $108.5 million from $91 million a year ago as revenue rose 22% at the company's core Ancestry.com website.
It also saw the number of subscribers, a key metric for a company like this, rise 16% to 1.87 million versus a year ago. Subscribers were also 10% higher than the fourth quarter.
Analysts Bullish About 2012
The first quarter was especially strong as interest in family history has grown. The much-anticipated 1940 census was released in April, which also spurred strong demand for more information.
Ancestry said it benefitted in the quarter from its 1930 census promotion which piggybacked on the excitement about the 1940 release.
5 out of 7 estimates for 2012 moved higher in the last 30 days pushing the 2012 Zacks Consensus Estimate up about 1% to $1.62 per share.
That is earnings growth of 25% over 2011 when the company made just $1.29.
Analysts expect the growth to continue, with 2013 earnings forecast to rise another 22%.
The recent sell off in the shares has created a buying opportunity. This is a chance for investors to get a fast growing Internet stock at attractive valuations.
This Week's Value Zacks Rank Buy Stocks
Can the department stores keep up their recent momentum? Macy's, Inc. (M) has been on a roll since the Great Recession and recently surprised on the Zacks Consensus yet again. After 2 years of double digit earnings growth it's expected to do it again in 2012. This Zacks #1 Rank (Strong Buy) also remains a value with a forward P/E of 11.3. Read the full article.
Generic drugs are the sweet spot for drug manufacturers. Par Pharmaceuticals Companies, Inc. (PRX) recently reported first quarter results that surprised on the Zacks Consensus by 12.3%. Even with shares soaring to 5-year highs, this Zacks #1 Rank (Strong Buy) is once again a value stock, with a forward P/E of just 10.5. Read the full article.
Expansion continues through the entire container industry. Textainer Group Holdings Limited (TGH) expanded its fleet by 5.5% year over year in the first quarter. Despite trading at 2-year highs, this Zacks #1 Rank (Strong Buy) continues to be a value stock with a forward P/E of just 8.7. Read the full article.
The specialty chemical sector has been in flux. Georgia Gulf Corporation (GGC) was recently a takeover target by Westlake Chemical, but that has fallen through. Shares of this Zacks #1 Rank (Strong Buy) soared on the takeover news but still have plenty of value. Read the full article.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at @TraceyRyniec.
ANCESTRY.COM (ACOM): Free Stock Analysis Report
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Georgia Gulf Corporation - Value
Thu, 17 May 2012
The specialty chemical sector has been in flux. Georgia Gulf Corporation (GGC) was recently a takeover target by Westlake Chemical, but that has fallen through. Shares of this Zacks #1 Rank (Strong Buy) soared on the takeover news but still have plenty of value.
Georgia Gulf manufactures chlorovinyls and aromatic chemicals as well as vinyl-based building and home improvement products.
Headquartered in Atlanta, its home improvement products include window and door profiles, mouldings, siding, pipe and pipe fittings and deck, fence and rail products.
Westlake Chemical Drops Takeover Bid
In September 2011, Westlake Chemical announced a $1.2 billion hostile takeover bid of Georgia Gulf at $30 a share. After discussion amongst the companies, Westlake increased its bid to $35 in February 2012.
But Georgia Gulf's Board of Directors rejected the offer.
On May 4, Westlake Chemical announced it was dropping its takeover bid.
Shares dropped under $35 on the news.
Georgia Gulf Crushed It In Q1
On May 2, Georgia Gulf reported its first quarter results and easily surprised on the Zacks Consensus by 39%. Earnings were 78 cents compared to the consensus at 56 cents.
Sales rose 9% to $859.9 million from $787.9 million a year ago. All three segments saw an increase in sales but the Building Products segment saw the largest jump, rising 19% to $187.2 million.
The first quarter operating results were the best for the quarter in the past 6 years.
Is The Housing Market Improving?
With building products being a big part of its business, the company has turned cautiously optimistic that the North American housing market has hit a bottom and has started to recover from recent record lows.
It also expects the cost advantage of domestic natural gas and growing global demand should provide support for solid operating rates in the vinyl industry, especially for housing and water infrastructure applications.
2012 Zacks Consensus Estimate Rises
Within the last 30 days, 2 estimates have moved higher for 2012 which has pushed the Zacks Consensus up 16% to $2.74.
This is actually a decline of about 25% from the $3.65 made in 2011.
But analysts see a return to growth in 2013 with earnings expected to grow 25.9% to $3.46.
Still Has Value
Shares skyrocketed on the takeover news in 2011. They have since cooled off now that the offer has been withdrawn but they are still well above the pre-takeover announcement.
Georgia Gulf has a forward P/E of just 11.7, under the S&P 500 average of 12.8.
It also has a price-to-book ratio of 2.1. A P/B ratio under 3.0 usually indicates value.
Georgia Gulf also has a really cheap price-to-sales ratio of 0.3. Its peers have a cheap P/S ratio too, averaging 0.8. A P/S ratio under 1.0 can mean a company is undervalued.
Georgia Gulf is a way for value investors in the specialty chemical sector to play the up tick in the housing sector.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at @TraceyRyniec.
GEORGIA GULF (GGC): Free Stock Analysis Report
GEORGIA GULF (GGC): Free Stock Analysis Report
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Textainer Group Holdings Limited - Value
Wed, 16 May 2012
Expansion continues through the entire container industry. Textainer Group Holdings Limited (TGH) expanded its fleet by 5.5% year over year in the first quarter. Despite trading at 2-year highs, this Zacks #1 Rank (Strong Buy) continues to be a value stock with a forward P/E of just 8.7.
Textainer is the largest lessor of intermodal containers in the world based on fleet size. It leases dry freight, refrigerated and specialized containers to more than 400 shipping lines.
The company also sells used containers to more than 1,000 customers around the world.
Textainer Beat Again In Q1
On May 8, Textainer reported first quarter results and surprised on the Zacks Consensus Estimate for the 4th quarter in a row. Earnings were 97 cents compared to the consensus of 94 cents.
Revenue jumped 28.9% to $117.5 million from $91.2 million a year ago.
Utilization remained near historic highs but did fall 1.3% to 96.9% from 98.2% a year ago.
The company also continues to expand its fleet. It ordered 224,000 twenty-foot equivalent units ("TEU") of new dry-freight containers and 15,000 TEU of new refrigerated containers for delivery through July 2012.
Container Demand Still Remains Strong
Even though utilization rates declined 1.3% year over year, since April, it has increased steadily. 79% of the company's fleet is committed to long-term, direct financing and sales-type leases, up from 76% a year ago.
It also continues to see "strong demand for new containers."
Zacks Consensus Estimate for 2012 Jumps
The analysts got really bullish after this report, as 7 out of 8 estimates moved higher in the last week.
The 2012 Zacks Consensus also rose by 5.1% to $4.09 from $3.89.
That is earnings growth of 14.2% compared to 2011 when the company made $3.58 per share.
Raised the Dividend For The 9th Quarter In A Row
Shareholders have been rewarded over the last 2 years.
Textainer has raised the quarterly dividend 9 straight quarters and did so again for the second quarter. The Board of Directors approved a dividend of 40 cents, a 8.1% increase from the first quarter.
Textainer is currently yielding 4.4%.
Shares At 2-Year High
Shares have been hot, but there's still plenty of value in Textainer.
In addition to a P/E under 10, it has a price-to-book of 2.4. A P/B ratio under 3.0 usually indicates value.
Textainer also has other strong fundamentals, including a 1-year return on equity (ROE) of 28.6%. This easily beats its peers which average just 8.5%.
The container companies are still growing earnings and paying out big paydays to their shareholders. Textainer joins other container groups in also being an attractive value stock.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at @TraceyRyniec.
TEXTAINER GROUP (TGH): Free Stock Analysis Report
TEXTAINER GROUP (TGH): Free Stock Analysis Report
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Par Pharmaceuticals Companies, Inc. - Value
Tue, 15 May 2012
Generic drugs are the sweet spot for drug manufacturers. Par Pharmaceuticals Companies, Inc. (PRX) recently reported first quarter results that surprised on the Zacks Consensus by 12.3%. Even with shares soaring to 5-year highs, this Zacks #1 Rank (Strong Buy) is once again a value stock, with a forward P/E of just 10.5.
The New Jersey based pharmaceutical company has two divisions, Par Pharmaceuticals and Strativa Pharmaceuticals. Par produces high barrier-to-entry generics and Strativa makes proprietary drugs.
It has more than 50 currently marketed products in 85 prescription drug families.
Par Beat In the First Quarter
On May 8, Par Pharmaceuticals reported its first quarter results and surprised for the third time in fourth quarters. Earnings per share were 82 cents compared to the consensus at 73 cents.
Revenue rose 7% to $271.5 million from $253.6 million a year ago.
Sales of its biggest product, Metoprolol, which is the authorized generic for all strengths of AstraZeneca's Toprol XL, rose 9.6% to $61.8 million from $56.4 million in the fourth quarter of 2011. The increase was driven by customer buying patterns.
Expansion In India
On Feb 17, the company completed its acquisition of privately-held Edict Pharmaceuticals Private Limited for $20.5 million at closing and $4.4 million repayment of certain pre-close indebtedness.
The Chennai, India-based developer and manufacturer of solid oral dosage generic drugs has a strong pipeline. It currently has 11 ANDAs filed with the FDA.
The Zacks Consensus Estimate For 2012 Jumped
The analysts are more bullish on 2012 than bearish after the first quarter report. 6 estimates have moved higher and 1 lower in the last 30 days.
The 2012 Zacks Consensus Estimate has risen to $3.89 from $3.72 in that time.
That is earnings growth of 15% as the company made just $3.39 in 2011.
Shares Near 5 Year High
It's been a heck of a run for Par's shares since the Great Recession in 2009. Shares recently touched new 5-year highs.
But Par remains a value stock.
In addition to a P/E of 10.5, it has a price-to-book ratio of 2.6. A P/B ratio under 3.0 usually means a company has value. It is also cheaper than its peers, which average a P/B of 1.8.
Par also has other solid fundamentals including a 1-year return on equity of 20.3%.
With double digit earnings growth and a P/E under the average of the S&P 500, this generic drug maker is a good combination of growth and value.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at @TraceyRyniec.
PAR PHARMA COS (PRX): Free Stock Analysis Report
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Macy's Inc. - Value
Mon, 14 May 2012
Can the department stores keep up their recent momentum? Macy's, Inc. (M) has been on a roll since the Great Recession and recently surprised on the Zacks Consensus yet again. After 2 years of double digit earnings growth it's expected to do it again in 2012. This Zacks #1 Rank (Strong Buy) also remains a value with a forward P/E of 11.3.
Macy's operates 840 department stores under the brands Macy's and Bloomingdale's in 45 states, the District of Columbia, Guam and Puerto Rico.
It also is an online retailer using the websites macys.com and bloomingdales.com.
Macy's Beat Again In Fiscal Q1
On May 9, Macy's reported its fiscal first quarter results and surprised on the Zacks Consensus Estimate by 7.5%. This kept alive its impressive earnings surprise streak which has stretched back to 2007.
Only one other time, in 2010, did it fail to actually beat and in that instance it actually met the estimate.
Sales rose 4.3% to $6.1 billion from $5.9 billion in the year ago quarter. Its same store sales jumped 4.4% year over year.
Online sales continue to be hot, rising 33.7% in the quarter. These are included in the same-store sales calculation and added 1.5% to the first quarter results.
Reiterated Guidance for 2012
Same store sales are expected to grow by about 3.5% for the rest of fiscal 2012. Adding in the first quarter results and Macy's is projecting about 3.7% same store sales growth. Its previous guidance called for 3.5%.
Earnings per share are still expected to be in the range of $3.25 to $3.30.
Fiscal 2012 Zacks Consensus Estimate Falls
Analysts were more bullish than the company going into this earnings report. The 2012 Zacks Consensus was looking for $3.40.
But with Macy's reaffirming the $3.25 to $3.30 range, the estimate has come down to $3.35. That's despite 2 estimates being raised in the last week and none being lowered.
That's still earnings growth of 16.4% over fiscal 2011.
Macy's Is Still A Value Stock
Shares had been on a tear over the last year, nearly doubling in price. But the weaker-than-expected full year guidance spooked some investors who sold off the stock.
The recent sell off has only enhanced Macy's value.
In addition to a P/E of 11.3, which is well under the P/E of competitors like Nordstrom (JWN) which trades at 15.7x, Macy's also has a price-to-book ratio of 2.6. A P/B ratio under 3.0 usually indicates value.
Even more impressive is Macy's price-to-sales ratio which is just 0.6. A P/S ratio under 1.0 can mean a company is undervalued.
Macy's also has other solid fundamentals, including a 1-year return on equity (ROE) of 21.2%.
It continues to reward shareholders with a dividend yielding 2.1%.
For investors looking for a value play among the department store names, Macy's is it.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at traceyryniec.
MACYS INC (M): Free Stock Analysis Report
MACYS INC (M): Free Stock Analysis Report
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