Unfortunately value is one of the most amorphous and elusive concepts. Meaning that not all investors are in agreement on what constitutes a value stock which is why some value stocks spring higher while others languish. Even more painful is that some of these so called value stocks drop further because they are actually fundamentally unsound companies that only go from bad to worse (aka Value Traps).
Let me share with you the criteria I used to find these 16 value stocks today so you can appreciate why they have the most upside potential…and quite unlikely to become value traps.
- POWR Rating of A or B: this is our proprietary rating system that measure 4 aspects of a stocks attractiveness. Everything from the long term Buy and Hold grade to its near term timeliness in the Trade Grade. Then it looks at the company it keeps by measuring the health of the industry group followed by how it stacks up within the industry. This all boils down to a stocks timeliness because as Newton said “a body in motion stays in motion”.
- Earnings Beat: In the category of “what have you done for me lately?” we want to make sure that company fundamentals are healthy. So yes, most companies beat earnings. So this is a low hurdle for companies to cross. That’s why I put the next point into place as a more stringent indicator of healthy fundamentals.
- Earnings Estimates Going Higher: We want the Wall Street analyst community to be so impressed with earnings results that they actually raise earnings estimates for the future. Not just the current year, but for next year as well. Meaning whatever positive elements took place in the most recent earnings report they expect to repeat out into the future. This is the best fundamental measure of health for any company and greatly decreases the odds of being stuck in a value trap.
- Price Greater Than $10: Granted, stocks under $10 can be fun, but they come with a LOT more risk. So we want to stay focused on companies above this threshold.
- 30% Upside to Target Price: This is my favorite value metric. More than PE, Book Value, PEG, Price to Sales and the like. That’s because every industry has different measures of how the companies are valued. For example, energy companies are more about cash flow and net asset value of reserves than earnings. No one understands these unique measures of fair value than Wall Street analysts whose sole focus is how to monitor the health and value of the companies in their coverage. So here we want to focus on the companies with at least 30% upside to fair value. Yet we have three with more than 50% to go to reach their average target price.
Discover the full list of 16 stocks below. When you see a stock you like then click on the ticker to research further. Remember that the POWR Ratings system has 4 component elements that help you explore the full attractiveness of the stock. Get going below:
|Company||Ticker||Market Cap ($mil)||Last EPS Surprise %||Price||Price Target||Upside %|
|Marriot Vac Ww||VAC||$4,291||13.71||$98.59||$128.93||30.77%|
What to Do Next?
All the stocks above have scored well with the proprietary POWR Ratings model.
But tomorrow is a new day. More stocks will emerge as Strong Buys…or tumble to Strong Sells. And only POWR Ratings Premium members will have access to this information.
Gladly there is an easy solution…start a 30 day free trial to gain full access to all the POWR Ratings resources to help you stay a step ahead of the market. Just click the link below.
GM shares closed at $37.09 on Friday, up $0.18 (+0.49%). Year-to-date, GM has gained 13.18%, versus a 18.10% rise in the benchmark S&P 500 index during the same period.
About the Author: Steve Reitmeister
Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks. More...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|GM||Get Rating||Get Rating||Get Rating|
|SE||Get Rating||Get Rating||Get Rating|
|VAC||Get Rating||Get Rating||Get Rating|
|VVI||Get Rating||Get Rating||Get Rating|
|WYND||Get Rating||Get Rating||Get Rating|