Loading summary
Transcript3 lines
- [00:03]
A
This is the Value Investor Podcast with Tracy Reineck. All things value, all the time.
- [00:09]
B
Welcome back, value investors. Things are heating up here in the summer of 2026 as we're getting some sell offs in some of the tech related names and we're still getting rallies, but some weakness as well in the old economy names. Anything with AI is basically kind of taking a timeout right here. And so I thought I'd run a screen this week just using a basic screen with some of my favorite components in it to try to see what's actually happening with cheap stocks out there. Can we get anything on sale here maybe in the AI realm, even though many of those have run well away from us. But you never know, poking around, we might be able to find some there. And what other areas, what other industries and sectors are seeing the value right now? Because that's what we're always looking for, right? And we have uncovered some interesting areas on this podcast in the last couple of years where, you know, areas you might not be aware of, but they've got that sex number one rank or number two rank which are the buys or the strong buys. So something good is happening with the earnings estimates, yet those stocks still remain cheap. And that's usually the out of favor industries that we look for as value investors. Because everyone knows AI is in favor, right? That's why it's hard to find anything cheap in the AI realm because everyone knows about it, they are all buying it. But for true value stocks, we like to look at areas that are being discarded by the market stocks or industries where people are like, why would you buy in there? We know some of them over the years. Energy is one of the big ones, but it's a cyclical, we've seen it with the banks. I'm still waiting, still waiting for the banks to have their big breakout moment. Some of the big banks have, and we've covered the international banks here on the podcast recently because they still remain fairly cheap even though their stocks have taken off. So we've had a few mini breakouts in the big, bigger realm of banks, but those regional banks and those smaller community banks are still kind of in that narrow trading range, haven't really broken out. You can however get some very juicy dividend yields with some of those banks right now. So poking around and you want some income, take a look at there. But they're still mostly hated and we can add a few other areas onto the hate list. Now the auto sector has been hated for a while and also retail and rightly so. In both of those they've the autos dealing with tariffs, but so is retail. I recently saw an article that the retailers are back again to some of the behavior we saw last year with tariffs. But this year due to the Iran war, shipping costs have exploded. They're back to multi year highs on the big container ships. Now that is bad news for the retailers shipping in all of their goods for the holiday season. But many of them are getting it on ships early again. Usually they are shipping in a normal year and by, by about right now by July and into August but last year they were trying to ship as early as like May and this year looks like they're also doing the same thing, you know, trying to rush these transits in before those transportation costs rose further or there's more things to deal with like tariffs because those are still hanging out there too the possibility of some of those returning. So a lot of uncertainty going on with the retailers and then we, we have. Is the consumer spending, are they going to spend. We're already thinking about Holiday because that's the big, the big kahuna for the retailers is, is holiday going to be decent coming up this year? Nobody knows. But that's an area I'm staying away from because nobody knows. It's a lot of uncertainty there with the retail side. So what kind of screen did I run this time? So I did want those number one and number two stocks, the strong buys and the buys. So of course that went in my screen but otherwise I ran the most basic screen you can run but I had to add a second component. So the most basic screen isn't just a price to earnings, a P E screen that doesn't really get me what I want in my most basic screen. So basic means it doesn't have many valuations or you know, I'm not using many criteria in this screen. So I went with price to sales originally and that's one of my favorite components. You look for it under 1. So if you have like 0.7 it means we're only paying 70 cents for every dollar worth of sales. It's hard to tweak the sales data at a company, not impossible, but it's hard to tweak it and it's a little easier to get that E on the earnings for the PE to be tweaked. You can do some things to get a couple cents here or you know, you can kind of tweak with that. But price to sales, you either have those sales coming in or you don't. So I Do like to use price to sales as the most basic screen. But when I ran it with the Zacks rank of number one and number two I still got 155 stocks. That is just too many for me to look through but encouraging that there's that many that have the high rank and the price of sales under 1. So I added the PEG ratio, my other favorite because it does have the PE in there but it combines it with the growth. So a PEG ratio under one usually means a company is also undervalued. So combining all three of those criteria. So again this is very basic but we are using the power of the Zacks rank to pull out not just cheap stocks but stocks that have something good going on with earnings. Rising earnings estimates. Now we are I am recording this ahead of earnings season. So some fiscal calendar year people have reported like a Nike Federal Express some of them but other than them we're waiting on everybody else. So it's a little difficult to know if if the number one and number two ranks are going to hold or if they're having those ranks because something good has just happened either like an investor day or they are a fiscal reporter. So they've had good earnings. So running this screen with the PEG price, the sales ratio, the number one and number two it did give me the 34 matches that's more doable. So I decided to look through those names and see what was up and it did give me some interesting trends that are going on. So there were some foreign banks once again on that list. Not surprised with that. Although price to sales doesn't really matter that much for banking but so there were a few of those. There were two retailers on the list so somebody has the number two and number one ranks on the retail side. But then there were a bunch of auto stocks on there and I am interested to see what is happening. The earnings are starting to turn around after they were totally demolished last year with the tariffs going on and trying to handle anything going on with the tariffs plus just slowing auto sales but those won't stay low for forever. So a lot of auto stocks and then just a mixture of a bunch of names, some I wasn't as familiar with as others some we've covered here in the past. So I tried to stay away from some stocks that are we've covered just more recently. But I am including one because it's sold off and it looks like a buying opportunity. Okay. So I picked out three. Let's talk about them And I'm going to start with the first one that I am not aware of, I'm sad to say I've never covered it. It's Werner Enterprises ticker W E R N. W E R as in Robert, N as in Nancy. It does have the number one rank. It is kind of a small cap, a larger small cap, let's just call it, because the market cap is 2.6 billion. It was founded in 1956. This is why I'm ashamed to say I'm not that familiar with it at all. But it is the premier transportation and logistics company in North America. It serves the U.S. canada and Mexico. And it is among the five largest truckload carriers in the U.S. so trucking. That's why I can't believe I haven't run across it before. But when I look at the price consensus and surprise chart, the earnings surprises are terrible over the last five years. But we know, or at least you do if you follow the value investor portfolio here at Saks, that trucking has been in basically a depression for the last three years. It's coming out of it now here in 2026. Finally it's coming out and that's getting the better Zachs rank with these stocks. But over the last three years it's been terrible. And there is a host of red arrows on Werner's chart starting back in 2022, extending all the way actually through the beginning of 26. And then finally last quarter we had a big green arrow but just earnings misses all over the place. Earnings declines happening in those years. And the Shares hit new five year lows in 2025. So earnings declined in 2023 by 47%, 72% in 2024. It doesn't say in 2025. It does look like a rebound though. So then we finally started to get a little bit off of just those dev. And then now here in 2026. Let's see. It looks like it's better. Yes. It doesn't even show up on the little chart on the quote page because it's so messed up and the rebound is so great. It just, it didn't even bother like malfunctions when it's this big. So they lost 2 cents a share last year and this year expected to do 95 cents. So that's a jump of 4850%. That's why it gets messed up on that little chart. It like can't handle it. And then 2027 as things continue to turn around, up another 111% to 201. One estimate is up in the last week for both this year and next year. That's why we're getting the number one rank. Is it a number one? Yes, number one rank. With Werner the most accurate estimate is now. And that's the one that just came in is looking for a $40. And again the consensus is at 95 cents. So that's not even close. They are way more bullish than what this says. And for next year the same analyst is looking for 291 and the consensus is at 201. And why are they so bullish? Yes, we're coming out of this depression. So manufacturing is rebounded this year. In 2026 it too was in a recession. Not surprising. They go together. So you have both of those recovering. When manufacture recovers, the demand picks up for transportation and trucking has really picked up. It also means there is capacity limitations and so the trucking rates have skyrocketed. So you're really going to pay more. As I was mentioning earlier with the retailers, those are on the shipping containers coming from overseas. But even when they get the item to the port here, they have to put it on these trucks. They have to put it on Werner's trucks and ship it to Omaha and or they're putting on a train. But some way they're getting it to wherever they need to go with their retail. And those are at really high rates right now. So we're seeing it in the earnings now starting to turn around. And this is when you want to own the transports and this specifically trucking or shipping, not so much airlines because of the fuel costs right now with the Iran war. But still this is a good time to be in the transports. Now everybody hated it. As I mentioned, Werner was at five year lows in 2025 and the the earnings chart looked awful. But it is rebounding now. And so you're getting in just as the rebound happens. Now Penn on Werner is at 45 and that's because the stock has rallied this year even though, you know, the earnings are kind of delayed. So the street has figured out hey, you know, something good is happening here. And so we do want to get in off of those lows. So shares are up 41% year to date and they have pushed up the P E But we're seeing as the sales rise these low ratios on the price to sales which is at 0.9 and then the PEG ratio is also at 0.9 because that 4,000% earnings growth is a factor even as the price of the shares has risen. So they have earnings on July 28, I'm going to be watching with any of these transports. I am expecting really good things. The analysts are too. They're raising, going into earnings. Very bullish. The analysts don't like to be wrong. So why not just kind of sit and wait and then have them be and raise and then you can raise. But if you really have conviction and you know you're, you're way under and that the industry is just really starting to cook, then you're raising. And this one analyst has decided they're way behind and they need to be raising. So very bullish right now on the transports. Again, I am surprised. I haven't seen Werner Enterprises in front of me ever. Maybe. But depression in transportation meant, you know, obviously we wouldn't be looking at it because those earnings were terrible. But turning around now. So this is when you want to get in it. And the ticker again is we are. And okay, I do want to switch over to the auto sector now. On the Market Edge podcast for this same week, I covered Ford Motor on there because it is a Zach's number one rank. And I was wondering what is happening to give it that number one rank. And so you can go listen to the Market Edge for this week in July. Yeah, you can check that out, go to YouTube. You can watch the video there. But Ford also appeared on this screen because of its rank and it's definitely cheap, even on a PE ratio. But GM also on this list. We've talked about them many times over the years. Lear is on this screen. I haven't seen them in a while, but the stock I chose is Magna. Magna International Ticker. M as in Mary, G as in George, A as in Andrew, mga. They're Canadian and they're one of the largest auto suppliers in the world. They serve North America, Europe and China. All of the brands. They have a footprint in 28 countries. They have 327 manufacturing and assembly facilities. I've covered them many times here on the podcast. But the tariffs really were beating them up last year. That looks like that has come to an end because the earnings are on the rise now. So we're number two on Magna. Not a number one, we're number two buy. They report at the end of this month of July, on July 31. So I'm glad to see that they have the good sex rank ahead of their earnings. Magna is nobody in the last week or the 30 days, but we do have one in the last 60 days. So the number two rank is holding based on nobody Cutting and still some bullishness in the last 60 days. So we're looking for 6687 for this year. That's up 19.9% from last year when they made 573. That was the tariff year and just really difficult for the auto suppliers because again they have a footprint in 28 countries. If those tariffs are rising into the US things, you know, supplies are moving all over for the auto industry, especially in the USMC CA zone, Canada, Mexico and the us so last year a little more troublesome, but it's coming out of it. And 2027 looking for another 13.3% earnings growth up to 7 79. So that's what you want to see. Magna is well run company. They manage their costs even as sales aren't jumping. But they're still able to get those earnings to PE even though we didn't track for it is low at 9.3. But price to sales of just 0.4. So we're only paying 40 cents for every dollar worth of sales. PEG ratio is 0.87. Even though these shares are also up year to date. Not as dramatically as Werner which was up 41%. They're up to 14.8% though and that's a nice little rebound. What do they look like over the last year? Bigger rebound because everybody has been pricing in, you know, better days ahead for the auto sector. So over the last year the shares are up 50.7. Werner's up about the same 49.7% in that time period. But most of Werners happened this year. So these are all you're starting to see the change in the cycle over the five year period. Not so great because both the transports and autos have been struggling. So Magna is down 30.8% in the 5 year stack and Werner down 2.8% in the 5 year Stack. So it's been hard to be a longer term shareholder in these than this more recent period. Now you do get a dividend with Magna that's pretty generous. They are very shareholder friendly because of the cyclical nature. And so they're trying to give you a reason to hang in there if you are the long term shareholder. So they pay A$98 and that's a 3.1% yield right now. So we're liking that. And again this year 6.87. So they can easily cover that dividend with their earnings. That's what I always look for to make sure I'm not going to be surprised by some big earnings or A dividend cut while I'm relying on that. But it is nice to get a 3% dividend while we're waiting for things to improve on the earnings side. And again, these shares hit bottom just like Werner did in 2025. They have rallied pretty significantly off of there but they're not anywhere near back the 2021 highs at all. So we have a ways to go and they're cheap. So I'm going to be tuning in to that next earnings report at the end of July, July 31st to see if this trend continues. They put together four beats in a row so things are starting to turn around. But we'll see if maybe it's even better than we thought in the first quarter. They did say they expected strong results in the first. Well, they had strong results in the first quarter of 2026 and then they maintain their 2026 outlook at that time. So we'll see if they still maintain it or maybe raise it. We just don't want them to be cutting it. But by the looks of things, it looks like we are seeing a nice turnaround. So that's Magna Ticker mga. And just so you know, I didn't cover the dividend on werner. It is paying one as well. Not as juicy. It's paying 56 cents. So now it is expected to make 95 for the year. So it can cover this. The yield is 1.3% on Werner now. But at least, least you are getting something as well for your patience on this. That one. Okay then the third stock is one I have covered recently but I want to return to it because it has sold off since the last time I covered it. It is still cheaper than ever and it is one of the rare AI stocks that is cheap on a classic value fundamentals. So it's J Bill Jabil, J Bill Ticker, jbl. You know how I am about names. Just remember jbl. J as in John, B as in Boy Ellis and Larry. Jbl. It's a number one and it's on the fiscal year. So it just recently reported third quarter, fiscal third I want to say. And they said infrastructure demand remains extremely strong. So yeah, third quarter. And this is a pure play on the infrastructure side. So what do they do? They're in engineering, supply chain and manufacturing solutions. They've been in business for 60 years. They have 100 sites worldwide. They did beat and raise on June 17th. That's when they reported the third quarter. They're also expanding manufacturing in India, sending out some press releases about that to Meet the India demand. Now shares did go to new all time highs on or right around the earnings report. And then even though they beat and raised and the shares are still cheap, when AI sells off, so does this one and it has sold off in recent weeks. So over the last month J Bill is down 10.8%, Magna actually is down 6 and Werner is down 2.7. But you're getting a little bit of a buying opportunity here with this correction. 10% back down. And if you were on the sidelines or thinking you had you missed it, you should have gotten in a while ago then. Now you're getting another opportunity, another chance. Year to date, the shares are now up 32%. So still holding on to a lot of the gains from the year to date. But it is cheaper than ever and just managed to sneak in on this screen now. So it's X number one. Because of that beaten race, the analysts are raising estimates. Price to sales is right at one. So we are paying a dollar for every dollar worth of sales. But those sales are surging right now and so this is still a deal for these sales. So sales in fiscal 2026 expected to be up 17.3% to about 35 billion. That's what they guided to and they only made 29.8 billion last year. And then next fiscal year up another 20% that the consensus is showing 42.2 billion for next fiscal year. So another healthy dose. So I'm, I'm only paying the dollar for every dollar but we are getting this phenomenal growth. So this growth is pretty cheap and I'm liking that. PEG ratio is at 0.88 as earnings expected to be up 30.7% this year to 1274. They made 975 last year. This is fiscal year. We only have one more quarter in this fiscal year. Five estimates are up in the last 30 days on the beat in the Rays. Nobody was cutting obviously then next year analysts getting more bullish there. Five estimates also up. We're expecting 1659. So 1274 to 1659. And these are the most accurate estimates because they did just come in recently and we've we got the beat in the Rays. The company gave the guidance and so everybody is on track and they're all in sync, the analysts with the company here. And now we have the shares pulling back which US value investors like to look at. Pe it has dropped as well as these shares have dropped back down to 25.2. That's not a classic value by any means. But for one of these AI infrastructure stocks where they are kind of trading in the 30s or the 40 times on the PES right now, this is looking a lot more attractive. So this is why I bought it in the value investor portfolio just last month. And this pullback seems kind of scary, but this is just looking like a really great picture. And these valuations are pretty juicy in the AI group for those of us on the value side. So this is Jabil, if we get more weakness in AI, I like it even more. So keep it on your radar. And if you're looking around for a cheap or cheaper AI infrastructure stack because you missed out or you want to add something new to your existing portfolio, then Jabil JBL is one of those you should be watching. Okay, so it's an interesting mix of stocks right here. We are still able to find these cheap stocks with the high Zacks rank and use the Zacks rank as a tool to really find the best companies. Right now we want rising earnings estimates. Even as a value investor, cheapness is, doesn't mean much if they're actually not growing or turning it around on the earnings side. So with all three of these, it's turning around and we are actually getting earnings growth. No value traps here with any of these three. So let me repeat again what stocks we had. Werner Enterprises. Yeah, trucking is back in. It had those dark days, but now there is sunlight and so it's not too late. Usually it's a multi year cycle with the transports and so I'm liking them here. I'm liking any of the truckers. Werner Enterprises. Ticker W, E, R, N Magna on the auto side. I mostly avoided this during the tariff wars last year, but it is still cheap and earnings turning around on Magna too. Ticker M as in Mary, G as in George, A mga and then we had J Bill on the AI side. Ticker J as in John, B as in Boy, L as in Larry. And keep Ford, General Motors Lear on your watch list on the auto side. And then should I tell you the retailers? I will. We had two retailers, Victoria's Secret and Signet Jewelers. I'm a little worried about Signet only because it's very discretionary. And then we also have price of gold and silver rising. So that could eat in the margins but it's on this list so you might want to just keep an eye on it. Victoria's Secret. Ticker V as in Victor. S X, Y, V, S X, Y. Yes, V Sexy. And then Signet S, I, G S I G for that one. And in case you don't know, let's see, Lear is L E A L E A Ford is F. GM is gm. So a lot going on. I aim to bring it to you all throughout earnings season. A lot is going to change on the Zach's rank, but we'll be watching a couple of these earnings reports coming at the end of the month on Werner and Magna. But I'm liking where we stand and I feel bullish on both of those for this coming earnings report. But a lot of new names will probably show up. Look to buy on pullbacks on any of these that have had big runs because you always will get those things. Get timeouts, they take a break like J Bill is right now, but underlying fundamentals look solid. So be sure to join me every week. We are on YouTube but in our audio form. Get us on our podcast channel there. You can also get the ETF Spotlight and some of our other audio podcasts on our YouTube channel. Go to Zach's podcast to get that one. I know many of you are subscribing over there. You can just subscribe, click to be notified when the new ones drop and listen as you drive to work or take the public transportation. But definitely listen in on YouTube and you can find us on Apple. Of course I know many of you are there. We're on Amazon Music, Spotify. We're on SoundCloud along with the Market Edge. Check out the Zack's Market Edge podcast as well. We give stock and ETF you know picks out weekly on all of our our podcasts basically, so be sure to join us on one of them. There's something for everyone and I'll be back next week with some more value stocks.
- [34:38]
A
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 and the 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 companies, sectors or markets identified 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.