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This is the Value Investor Podcast with Tracy Reinek, all things Value, all the time.
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Welcome back value investors. So as the growth stocks continue to rally and the valuations are rather stretched, I know many of us value investors are getting a little anxious and wondering whether or not there is any good value stocks out there. I've been covering the classic value. We recently did a podcast on those. So definitely go listen to that podcast because those are deep value stocks with the good Zachs Rank. But for this week, I decided also to deploy the Zach's rank again and look for those number one stocks. Because the strong buy stocks are companies that are doing something a little above the norm. It means that the earnings estimates are on the rise and that the analysts are raising those earnings estimates. We're mostly done with the first quarter earnings season now and we're getting a few of those fiscal year reports, but we're waiting for the second quarter now. And so the rank is kind of set right now. And so this is a good time to look at screens with the rank. It's not going to be varying too much right now though. So a lot of the cheapest of the Zach's number one ranked stocks are still the same companies as a couple of weeks ago. But I decided to take a look at a few of my favorite value fundamentals. So that would be the price to sales ratio and the peg. So the price to sales, as I've always said, we like to look at it even more so than the the price to earnings, the pe, because that means we're getting the sales at a discount and it's hard to really finagle on the sales side. You can mess around with things and boost your earnings or get an earnings number you might want to get. But you can't really do much on the sales side. You either have the sales coming in or you don't. So a price to sales ratio under one, like a 0.7 for instance, means we're getting a dollar worth of sales for just 70 cents. And that's what we want to do. We want to get those sales dirt cheap on the peg side that find the PE over the growth rate. And if you look for a peg under one, that means the company is cheap in in some way. Either the growth is dirt cheap and those earnings are really skyrocketing or the price is pretty low. And so that's why we're getting that peg for those earnings under 1. And that will give us value plus growth. And that's kind of a rare combination. Everybody's Talking about those growth stocks right now. But most of the growth stocks are not on the value side and so the PEG kind can uncover where the actual growth is with that side order of the value. So again that is pretty rare to get it that low. But right now we are seeing this tremendous growth on earnings either in growth or value stocks actually. And so with record earnings growth expected in the S P500 right now we're getting a lot more of these PEG ratios under a dollar. So that's good to see. So that's all I put in the screen. It was a my own made up screen this week. So it's Zach's number one ranks, the strong buys price to sales under one and the PEG under one. I didn't look at volume or anything else. This is it. And I got 12 stocks so that's, that's a good number. It's easy to look through that kind of list. What was on here? A lot of the companies we've been seeing recently, including like Dow Chemical, they were on there or just Dow as their called now I guess they got rid of the, the chemical side but like it's just Dow now they're on their Nexa Resources which I talked about in the, that classic value podcast they were on there again. And then we've got a lot of the refiners. So refining is hot right now. Those are the companies that are not drilling for oil. They are taking the oil and making it into products whether it's gasoline, diesel, jet fuel, asphalt, chemicals. Like that's their side of the business. And right now we know jet fuel is at a premium. If you're making the jet fuel you're able to charge a lot more for it. And so their margins are going up and their earnings are going up. This is a good time to be a refiner right now. So I'm not surprised that a bunch of refiners showed up and going to talk about one on this podcast. Otherwise I tried to stay away from some of the stocks that we've already covered in recent weeks. And so none of these three that I'm going to talk about have we covered recently. Although this first one we have talked about in the past and so it's returned, it's still a Zach's number one rank and it has really great earnings growth opportunity here. So what is it? It's bright spring health services ticker is B as in boy, T as in Tom, S as in Sam, G, B, T, S, G. It's of course the number one. It has a price to sales ratio of just 0.88 and a PEG ratio of 0.79. Obviously, they both have to be under one. That's what I looked for. Now, when you go and you look at this stock on Zachs.com so you put in BTSG, you're bringing it up, you're like, oh, Tracy says this is a value. And then you look and you see forward PE 36.6. And you're like, what? How could this be a value? Well, remember, we did not screen for just pe, but the PEG is giving us that. This has a lot of growth, but it's still cheap for the growth. And so looking at the EPS growth rate, they actually grew earnings at 78.6% in 2025 and now this year in 26, expected to grow at 67% and then continuing with the growth of 19.2% in 2027. Well, what do they do if they're health services, that they're seeing this kind of growth? Well, they are a primary care provider in the home. That's what they focus on. Remember, we've talked about them before and they focus on senior and specialty patients. They're in all 50 states and they serve 400,000 patients daily. Now, one of their big parts of the business isn't necessarily going into homes and doing, say, rehab services, but they do do that. They have pharmacy and then they have the provider. Provider services. Both are doing well. In the quarter, total revenue was up 25.6%. The pharmacy solutions was up 25.2 and provider services was up 27.9. So that seems pretty equal there on the growth side. But the pharmacy side was 3.17 billion in revenue in the quarter and the provider side was 442 million. So you can really see how the pharmacy is really the big driver on the revenue side. But we have some good margins going on. That's how we have the earnings growth. It's a $12 billion market cap company, does not pay a dividend. It only went public in 2024, so it's only a couple of years old. It is trading at new highs as I'm recording this on June. So the stock has really been soaring. And over the, let's see, one year time period, we're up 180% over that one year and year to date. Let's see what it's doing in 2026. It's still up 61.9%. That's why you now have the 36 times on the PE, even though we've got the low peg over the last month, a little more muted, but still up 14.7%. So we're still seeing, you know, nice rally there over the last month. And people really like these, like medical services companies right now. And that's because, I mean, the baby boomers are not getting any younger. They have reached their 60s now and it stretches as old as 80, 80, 81. And so this kind of services is in more demand. There's just still a lot of baby boomers and we're going to need a lot of these services and they're going to use them. So this is a big growth area. So if you're looking for a way to kind of cash in on the boom in health care as the baby boomers age, this is one to keep on your watch list. What's happening with those estimates they did a couple of months ago. So I am kind of surprised that they still do have the number one rank. Nobody has raised in the last seven or 30 days. All of the estimate increases were from 60 days ago and there were five for the full year for this year, five for the full year for next year. So quite a few number of analysts now covering this company, even though it's relatively new. And on the estimates they're looking for a $67 for this year. That's up from a $51 just 60 days ago. And so that's where we're seeing the that growth. They only made a dollar last year. That's why we're seeing 67% increase there. They have beat three out of the last four quarters and the only one they missed was fourth quarter 2025 and they only missed by a penny. So this is pretty bullish. And so again, if you're looking for a health care company on this kind of in home care, which is the big driver, it is a lot cheaper than having people in assisted living to bring the services into the home. And so these are the types of companies that are doing it. So Bright Spring Health Services, Ticker B T S G. Okay, the second company, I was a little reluctant to do this one, I have to admit, and I've seen it on our screens many times and I'm like, nope, not, not going there. Not with the tariffs, not with the struggling consumer. I can't do it. But now I'm doing it. And it is Lifetime brands Ticker LC UT Lifetime brands. It is in the consumer discretionary that tells you all you need to know why I've been reluctant. It's got the number one rank though. So I'm like, is this, is there something the analysts know that I should be aware of? And just looking at the chart, it's had several big sell offs. It has a big sell off in 22 into 23 and then again in 25. That was probably tariff related, I would assume. But it sank down to another five year lows in 2025 and even to start 2026. And then I think people just decided this is too low and we've got a couple big earnings beats. And so now the stock has rallied big. It still remains cheap. This is a small cap, so it's going to be. And again, on the consumer discretion side. So what do they do? You just know the name Lifetime brands. What does that mean? Obviously some brands. So I did think, oh, is this like cleaning supplies? Like what are they making? But they are a leading provider of kitchenware, tableware and other products for the home. So on the kitchen side they have like Faber warehouse. They do KitchenAid. Those are the appliances. We all know the KitchenAid mixer, kitchen craft. There's a whole bunch of brands on the tableware. They do Mikasa Falls Graft. Am I saying that right? That's fat scratch false Craft. I, I bought their plates, so I do know that brand. So we know the products that they make in the first quarter, which had that big beat. Home solutions was up 23% in the quarter. But it looks like based on what the earnings have done, it's coming off a very low base. So maybe the dark times are over. This, this stock kind of reminds me of some of the other ones I've talked about, like Helen of Troy, which makes a lot of like small appliances. And so tariffs and the consumer have just like been crushing them. But it's got to, it's got to rebound at some point, right? So net sales were up 2.4%. So at least they were up in the first quarter to 143.5 million. So again, this is a small cap. They have a market cap right now of 209 million. And gross margins improved up to 37.7% from 36.1 a year ago. So I'm liking that. That's what I want to see. That's going to help with earnings. But this was interesting. In the first quarter, the Dolly Parton brand was strong. And anytime I see anything with Dolly Parton, yes, I, I wanna, I wanna part of that. She's very strong brand and she's smart on who she partners with and what kind of products she's putting Out. So Dolly Parton brand was strong. Kitchen tools division, which is their largest division, also delivered and this is what they said, strong performance. So I'm liking that. And the shares have been surging. So we have the cheap valuations. Price to sales is just 0.3. PEG is at 0.9. Again, both of these are going to be under 1. We've got the Zach's number one rank forward P on this one is cheap 12.5. And they do pay a dividend yielding 1.9%. Right now it's just 17 cents but they are paying some kind of dividend now. Earnings rebounded last year up 39.7%. And then. Well, I guess they were up the prior years but this year expected to be down 9.9 but rebounding again in 27, up 37%. So it's a seesaw. They're trying to find, you know, stabilization. A lot of inflation to deal with as well. No? Yeah, this year down 9.9 as I said. So revenue side expected to be up 3.6. So you're not getting the double digit revenue growth. Not surprising because they're being pressured a lot of ways. It's hard to get that gross margin to go up but they did manage to do so. They're going to have to raise prices and then will the consumer be pushing back? These are all the issues and why I didn't really want to cover lifetime brands but it does meet the criteria and so I thought I'd take a look. It's been a little while since we looked at one of these like a Helen of Troy, which shows up in our screen many times. So this one, you know, kind of hit bottom and then has had a big rally. So off of this last earnings report the shares are up 48%. But. And that's just in the last month, but they've kind of stalled out in the last week. They're down 1% and for the year, year to date up 141%. But coming off of that low level and it's a stock under $10, it's trading at $9 right now. So it's going to be pretty volatile. It got dirt cheap and some of the bottom feeders got in. But is this enough? Is it. Is it cheap enough even right now to to buy in further? Is. Is the worst over? I don't know. It's had some ups and downs over the last five years. So it's still down significantly in the five year period. It's still down 43% over the five year period. But as value investors, we do like to go in when everybody is hating on it and even I'm hating on it. So. So maybe it's a time to put it on your watch list. It's already bottom though and already had this big run. So we're not getting it in at the very bottom anymore. And so I prefer to get these ones, you know, a lot lower in the rebound cycle if I could. But it does have the number one rank because those analysts have been raising. This one is also in the last 60 days, two estimates higher for this year and next. In the last 60 days, we're looking at 73 cents for this year and that is up from 61. So that is pretty significantly higher. And so I'm liking that. And last year they did make 81 cents, however, so that's why we're down 9.9%. But next year they're looking for a dollar. So this year $0.73, next year a dollar. So I'm liking all of that and it is on the good trajectory. So it just depends. Do you want to own kitchenware and tableware and other products for the home? That's a question you're going to have to ask. But when the consumer is stretched, they're going to cut back on buying that KitchenAid, you know, product or maybe getting those new plates or other things like that in, you know, so we'll see. They did raise the sales in the first quarter, so that's good. And this Dolly Parton line sounds like it's really taken off. Let me see what it is. I did not look it up. Is it plates? What is it? Just says home, kitchen and tableware products. They do have a whole link to it on their website. Okay, good to see Touch of Dolly signature style to homes across America. It's not telling me anything else like what it is. It looks like some canisters, so I'm not sure, but a bunch of. Wait, there's another website that's selling it. Let's see what they have. Dolly Parton. Okay. We have bag clips with her face. There's mugs. There is a tea infuser shaped as a dolly guitar. It's pink. I liking that. There's a spoon rest with her hair. I love that dolly guitar. Oysters for your drink. There's sponges, There's a guitar sponge even. So this gives you some idea. These are fun products. And again, the dolly name is just strong. People want to own products like this because they're fun. The back clips are especially fun. It does show her full face and you get a couple different views, like, you know, a couple different styles of her hair and everything. And it's funny to see it on the bag. So just FYI, I guess I'm giving it a little bit of promotion here. No, there's a dinnerware set to false graphics actually is making the dinnerware set and so false graft established in 1811. So there's a Dolly Parton mosaic peach butterfly 12 piece dinnerware set. So it's got the butterflies on it. It comes in the peach, there's one in the blue. There are a set of two double wall glass mugs so you can put those in with the heat. Usually with the double glass. There are appetizer, dessert. The the mugs on the Falls graph site are really pretty. They've got some flowers on there and then there's mugs with the lid coaster as well. So for tea lovers, there's a four mugs with a rack. There's stemless wine glasses. There's also some flatware and a cake knife and server set. There's even a deviled egg tray shaped as a butterfly which is pretty. So you get the idea. There's quite a few. If you're looking at Falls graft, there's a pie plate and a utensil flatware caddy that's real cute too. So I can see why these collections are selling. There's a lot of things going on with her name and brand and again she is popular so that is selling well. So that's lifetime brands, ticker lcut and then we're going to switch over to one of the refiners. As I mentioned, we covered Valero on one of the other recent podcasts. They showed up on the screen but I'm going to go with Phillips 66 this time. So they do refining, midstream marketing and chemicals. They do asphalt fuels, aviation. These are all the basics. In the first quarter, refining was at 95% capacity utilization. But the first quarter is really in the rearview mirror now. We're heading towards the end of the second quarter soon. May, June. I guess we have another. We've got a little time left in this one. But no, we are heading towards the end of June here. So. So this is going to be the more interesting quarter and that's maybe why it's showing up as a Zach's number one rank right now. So they did have hedging on and they took a big loss in the first quarter when the war started. But that has Turned around now and the earnings have improved. So in 2025 earnings grew just 4.7%. Now 2026 expecting 173% because again if you're making jet F fuel and they are because they have an aviation division then that those you're getting really good prices for what that product is right now PE just 10.1 with Phillips 66. PEG ratio 0.26. Price to sales 0.5. These are all values. Dividend of course they pay 1. It's $5 and 8 cents. It's yielding 2.8% even though the shares are at or near 5 year highs. Let me look. They pulled back after the war started. It got a boost then it pulled back, now it's getting a boost again. But they're not quite back to those all time highs yet. But still pretty elevated up there. Let's see year to date now on Phillips they're up 39%. That's pretty good, pretty outstanding. And over the last month they're only up 5%. A lot of the energy names have taken a timeout in the last month thinking that the war was going to end and maybe these good times are going to end too. So we'll keep an eye on that and watch that. It hasn't really done much in the last week. It's basically flat. So all depends on when you got in here. Three month return is 11% on Phillips 66. I still really like the energy trade even on the refiners. Let's take a look at what is going on with those earnings. And if anyone is raising those earnings estimates they will report again at the end of July. That's the second quarter. And so we have, we do have some estimates up in the last 30 days here unlike the other two. So we have seven up in the last 60 days and that's after the last earnings report. But in the meantime as things have stayed elevated some analysts have gotten more bullish. And so two estimates are up in the last 30 days for this year. Two are up for next year. One is up for this quarter as well in the last 30 days. So we're looking at 1764 for the full year now and that is up from 1665 in the last 30 days. But the most accurate estimate is actually down under the Zach's consensus at 1570. And that person was also lighter on this quarter. So we have 583 for this quarter and that's up from 373 in the last 90 days. So while the war has been going on that's how much it's increased. But this most accurate estimate is taking it back 90 days back to 351 underneath the 90 day period. So that's a little bit surprising. I'm not sure why they're, they're so pessimistic there. We'll have to see what happens. Every, every refiner has differences going on with what kind of products they're making, what kind of margins they're getting on those and maybe they're in ones where they're not getting quite as high as some other areas, I'm not sure. So we'll just have to take a look at what happens in this next quarter at the end of July when report again then. But I still like the refiners. They're still very cheap here. You do get very good cash flows with them. They did raise the quarterly dividend in the first quarter by 7%. They had 6 billion in liquidity at the end of the first quarter with 5.2 billion in cash. That's what we like to see. And you know, this high refining capacity utilization, they're all working at as high as they can get it to make as much money as they can right now. So that is Phillips 66 ticker P as in Paul S as in Sam X P S X. And just to take a look to kind of see how it compares with Valero Ticker Vlo again they're also a number one. They showed up on this list as well. They are expected to see earnings growth of 149%. We do have some mix. Somebody is lowering in the last 60 days for the quarter for them. But there is an increase as well for them in the last 30 days with one analyst raising there just like with Phillips 66. But in this case the. Oh no, this one is also lower. I wonder if it's the same analyst because the most accurate estimate for the quarter for Valero is looking for 419 and it's at 7:09 for the consensus right now. And the 90 days ago was at 401. So they're looking for basically the same as we just saw in Phillips 66. And for the full year this analyst is under the consensus as well. And this although it has been raised in the last 30 days, nobody is cut for the full year on Valero or Philips 66. 66. So it's a bit of a mystery who, who is this bearish and will that person be right? All the other analysts are very bullish and so that's why we're getting, you know, these big increases in the earnings and why we've got this X number one rank. They aren't cutting but they're coming in with consensus estimates that are a little low. At least this one person is. Even though they raised off their low point. So interesting. I always like to dig deeper into what the is happening with the detailed estimates. I really recommend checking out that page when you're looking at the estimate changes and what might be going on with the rank because sometimes you get these little mysteries. So that's just Bolero Ticker vlo. But they all are trading near their highs. They are seeing this gain in the earnings and unless you're that one analyst who thinks maybe not but you know, things are cheap for now, but it's a matter of how long will they be holding these margins and these crack spreads as they're called in refining we will see for Valero next year sees an earnings decline of 19.5% because these are rather cyclical depending on the underlying commodity costs and all of that. So a lot of these commodity stocks again on this list and we're getting companies like Lifetime Brands. We're not getting Helen of Troy. I think the Zach's rank is still not good with that one. No, it's. It is a number one. Wow. So even have the number one rank after it was a number five for forever Helen of Troy PE of 7.8. But maybe it just doesn't have Price to sales is 0.35. Price to book is low PEG ratio. We don't have a peg ratio for this one because we are expecting negative earnings or no, there's positive earnings but earnings to decline again, maybe that's why but declining four years in a row. And so the earnings outlook just looks still really bad until fiscal 2028 expected finally a rebound of 16.6. But will it unclear. These shares have bounced off of the recent lows like Lifetime Brands. But again, I just can't go in there. It's just not where I want to be right now. So keep that in mind when you're looking at any of these. Keep them on your watch list as I just did watching Helen of Troy. H E L E is that ticker along with with Valer Ho I'm going to keep all of these on my list. But on this list was bright Spring Health Services ticker BTSG Lifetime Brands L C U T L Cut L C U t and then Phillips 66 p s x is the ticker there. And as always, I'm looking for all these value stocks every week and we'll see as we go into the second quarter what's going to happen with the Zach's Range rank on some of these companies, but I'm still able to find cheap stacks out there with the good rank and we'll see as we move forward through this year. But keep subscribing. Go to our podcast page on YouTube. It's separate from our regular channel. Subscribe there. I know many of you are to get all of our podcasts there and and you can get the ETF Spotlight with Nina Mishra. That's a great podcast. And our podcasts with Shiraz Mian and with John Blank are also on that page along with the Value Investor. So you can get a bunch of podcasts and listen at your leisure about a lot of different topics going on out there in the economy, with earnings, with value stacks, with ETFs. Make sure you get us all and I'll see you again next week with some more value stacks.
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This material is being provided for informational purposes only, and nothing herein constitutes investment, legal, accounting or tax advice or a recommendation to buy, sell, or hold a security. Do not act or rely upon the information and advice given in this podcast without seeking the services of competent and professional legal, tax or accounting counsel. Publication and distribution of this podcast is not intended to create. Any information contained herein does not constitute an attorney client relationship. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. It should not be assumed that any investments in securities, company sectors or markets identified and described were or will be profitable. All information is current as of the date herein and is subject to change without notice. Any views or opinions expressed may not reflect those of Zack's investment research as a whole.