Zacks.com featured highlights include JD.com, EnerSys, AXIS Capital and Pebblebrook Hotel
For Immediate Release
Chicago, IL – October 9, 2024 – Stocks in this week’s article are JD.com, Inc. JD, EnerSys ENS, AXIS Capital Holdings Ltd. AXS and Pebblebrook Hotel Trust PEB.
4 Top Value Stocks to Invest In as Market Faces Volatility
Wall Street began the trading week on a volatile note, as inflation concerns and external pressure unsettled the stock market. Escalating geopolitical tensions, apprehensions related to Hurricane Milton and the heated presidential election season caught investors off guard. Moreover, last week’s strong jobs report has tempered hopes of another significant interest rate cut by the Federal Reserve.
Major indices suffered broad declines on Monday. The Dow Jones Industrial Average dropped 0.9%, or 398.51 points, closing at 41,954.24. The S&P 500 slipped 1% to 5,695.94, while the Nasdaq Composite lost 1.2% to settle at 17,923.90. The surge in oil prices, driven by ongoing conflicts in the Middle East, also spooked the market.
Monday’s market struggles underscore the broader uncertainty facing investors. In this environment, value stocks stand out as a compelling investment option. Trading below their intrinsic value, these stocks offer a margin of safety during market fluctuations.
When evaluating value stocks, one of the most effective valuation metrics is the Price to Cash Flow (P/CF) ratio. Companies like JD.com, Inc., EnerSys, AXIS Capital Holdings Ltd. and Pebblebrook Hotel Trust boast a low P/CF ratio. The P/CF ratio 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.
Price to Cash Flow Reflects Financial Health
You must be wondering why we consider the P/CF valuation metric when the most widely used valuation metric is Price/Earnings (or P/E). An important factor that makes 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. Then again, cash flow is quite reliable. Net cash flow unveils how much money a company generates and how effectively management is deploying the same.
A positive cash flow indicates an increase in the company’s liquid assets. This gives the company the means to settle debt, meet its expenses, reinvest in the business, endure downturns and finally undertake shareholder-friendly moves. Negative cash flow implies a decline in the company’s liquidity, which, in turn, lowers its flexibility to support these endeavors.
What’s the Best Value Investing Strategy?
An investment decision based solely on the P/CF metric may not yield the desired results. To identify stocks that are trading at a discount, you should expand your search criteria and also consider the 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.
Here are four of the eight low P/CF stocks that qualified the screening:
JD.com, a leading supply chain-based technology and service provider, sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 24%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for JD’s current financial year sales and earnings per share (EPS) suggests growth of 4.1% and 27.6%, respectively, from the year-ago period. JD has a Value Score of A. Shares of JD have surged 61% in the past year.
EnerSys, the global leader in stored energy solutions for industrial applications, carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 1.5%, on average.
The Zacks Consensus Estimate for EnerSys’ current financial year sales and EPS suggests growth of 4.7% and 7.1%, respectively, from the year-ago period. ENS has a Value Score of A. Shares of ENS have increased 7.3% in the past year.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
AXIS Capital Holdings, a global specialty underwriter and provider of insurance and reinsurance solutions, carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 94.6%, on average.
The Zacks Consensus Estimate for AXIS Capital’s current financial year sales and EPS suggests growth of 7.2% and 8.7%, respectively, from the year-ago period. AXS has a Value Score of A. The stock has advanced 39% in the past year.
Pebblebrook Hotel Trust, a publicly traded real estate investment trust and the largest owner of urban and resort lifestyle hotels in the United States, carries a Zacks Rank #2. The company delivered a trailing four-quarter earnings surprise of 23.3%, on average.
The Zacks Consensus Estimate for Pebblebrook’s current financial year sales and EPS suggests growth of 2.9% and 2.5%, respectively, from the year-ago period. Pebblebrook has a Value Score of A. Shares of PB have declined 3.2% in the past year.
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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2347802/4-top-value-stocks-to-invest-in-as-the-market-faces-volatility
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Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
Pebblebrook Hotel Trust (PEB) : Free Stock Analysis Report
Enersys (ENS) : Free Stock Analysis Report
JD.com, Inc. (JD) : Free Stock Analysis Report