There are various approaches to investing, and investors can choose from different styles, including prioritizing generating income, targeting value stocks, or investing in particular industries.
Value-focused investors target mispriced stocks with the idea that others will eventually ‘catch on’ and recognize their actual value, which can lead to serious gains. After all, we all enjoy a nice deal.
And for those seeking stocks without stretched valuations – American Eagle Outfitters AEO, American Woodmark AMWD, and Dell Technologies DELL – could all be considerations.
In addition to sound valuation levels, all three sport a favorable Zacks Rank, indicating optimism among analysts. Let’s take a closer look at each.
Dell Technologies
Dell Technologies, a current Zacks Rank #1 (Strong Buy), provides information technology solutions. Analysts have raised their expectations among all timeframes, with the revisions trends particularly notable for its current and next fiscal years.
It’s worth noting that the company has consistently exceeded quarterly expectations as of late, beating the Zacks Consensus EPS Estimate by an average of 40% across its last four releases. Just in its latest print, Dell posted a 54% EPS beat and reported revenue 10% ahead of expectations.
Shares currently trade at an 11.3X forward earnings multiple, nicely beneath the Zacks Computer and Technology sector average of 27.4X. Shares have traded as high as 13.6X over the last five years.
American Eagle Outfitters
American Eagle Outfitters is a specialty retailer of casual apparel, accessories, and footwear for men and women aged 15–25. The stock is a Zacks Rank #1 (Strong Buy), with earnings expectations increasing across the board.
AEO shares currently trade at a 13.1X forward earnings multiple, nowhere near the Zacks Retail and Wholesale sector average of 24.2X and five-year highs of 39.4X. The stock sports a Style Score of “A” for Value.
In addition, income-focused investors could be attracted to AEO, with shares currently yielding a solid 2.6% annually. Dividend growth is also apparent, with the payout growing by 3% annually over the last five years.
American Woodmark
American Woodmark is the third-largest manufacturer of kitchen and bath cabinets. The company has enjoyed positive earnings estimate revisions across the board, helping land the stock into a Zacks Rank #1 (Strong Buy).
AMWD shares presently trade at an 11.3X forward earnings multiple, a few ticks below the 11.6X five-year median and highs of 18.7X last year. Like AEO, the stock sports a Style Score of “A” for Value.
The company has consistently posted bottom-line results above expectations, exceeding the Zacks Consensus EPS Estimate by an average of 25% across its last four releases. Just in its latest print, AMWD exceeded earnings expectations by more than 26% and posted a 2% revenue surprise.
AMWD’s revenue has shown steady growth.
Bottom Line
Value-conscious investors are always looking for deals, sitting in the shadows and waiting for the rest of the crowd to catch on. The strategy can be quite lucrative, especially when it’s paired with the Zacks Rank.
And for those seeking stocks with sound valuations, all three above – American Eagle Outfitters AEO, American Woodmark AMWD, and Dell Technologies DELL – precisely fit the criteria. On top of sound valuations, all three sport a favorable Zacks Rank, indicating optimism among analysts.
American Eagle Outfitters, Inc. (AEO): Free Stock Analysis Report
Dell Technologies Inc. (DELL): Free Stock Analysis Report
American Woodmark Corporation (AMWD): Free Stock Analysis Report
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