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Zacks.com featured highlights Archer Daniels Midland, Conagra Brands, Albertsons, Teck Resources and United Rentals

For Immediate Release

Chicago, IL – February 3, 2023 – Stocks in this week’s article are Archer Daniels Midland ADM, Conagra Brands CAG, Albertsons Companies ACI, Teck Resources Ltd. TECK and United Rentals URI.

5 PEG-Based Value Stocks to Pick for Your Portfolio Now

In a market dealing with external shocks, value investing is fast gaining popularity. The success of value investors like Warren Buffett underscores this. Buffett and his business partner, Charlie Munger, managed to register a 20.1% CAGR for Berkshire Hathaway from 1965 through 2021. This favorably compares with a 10.5% rise of the S&P 500 Index during the same period.

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Several other stocks, which have surged significantly in the recent past, have shown the overwhelming success of this pure-play investment strategy. Here we discuss five such stocks — Archer Daniels Midland, Conagra Brands, Albertsons Companies, Teck Resources Ltd. and United Rentals.

More on Value Investing

While searching for a suitable investment option, value investors with a varied risk appetite are unlikely to consider the price/earnings to growth (PEG) ratio among several other popular metrics like price/earnings (P/E), price/sales (P/S) or price/book value (P/B).

This is because they often find this ratio complicated, considering the limitations in calculating a stock's future earnings growth potential. Yardsticks, such as dividend yield, P/E or P/B, are commonly used to single out stocks trading at a discount.

However, while not taking into account the growth potential of a stock, these ratios might end up convincing us to invest in stocks that are at a discount just because of their poor show. This might often lead to “value traps” — a situation when these value picks start to underperform over the long run as the temporary problems, which once pulled down the share price, turn out to be persistent.

In such a case, even if you buy a stock at less than its fair value, you might still end up paying more. And here comes the importance of this not-so-popular but crucial value investing metric, the PEG ratio.

The PEG ratio is defined as (Price/ Earnings)/Earnings Growth Rate.

A low PEG ratio is always better for value investors.

While P/E alone fails to identify a true value stock, PEG helps find the intrinsic value of a stock.

There are some drawbacks to using the PEG ratio. It doesn’t consider the very common situation of changing growth rates, such as the forecast of the first three years at a very high growth rate, followed by a sustainable but lower growth rate over the long term.

Hence, PEG-based investing can turn out to be even more rewarding if some other relevant parameters are also taken into consideration.

Here are five out of the 19 stocks that qualified the screening:

Archer Daniels: Illinois-based Archer Daniels is one of the leading producers of food and beverage ingredients as well as goods made from various agricultural products. The company processes oilseeds, corn, wheat, cocoa and other feedstuffs. Moreover, it engages in the manufacturing, sale and distribution of products like natural flavor ingredients, flavor systems, natural colors, proteins, emulsifiers, soluble fiber, polyols, hydrocolloids, natural health and nutrition products as well as other specialty food and feed ingredients.

Archer Daniels has a long-term historical growth rate of 23.5%. AN currently carries a Zacks Rank of 1 and has a Value Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.

Conagra: Chicago-based Conagra is one of the leading branded food companies in North America. The company offers premium edible products, with a refined focus on innovation. Some iconic brands of the company are Reddi-Wip, Hunt's, Healthy Choice, Frontera, Slim Jim, Blake's and Marie Callender.

Conagra currently holds a Zacks Rank #1 and has a Value Score of B. CAG also has an impressive five-year expected growth rate of 7%.

Albertsons Companies: Headquartered in Boise, ID, Albertsons Companies, Inc. is one of the largest food and drug retailers in the United States. Albertsons Companies, with its robust local and national presence, occupies a prominent position in the industry and offers grocery products, general merchandise, health and beauty care products, pharmacy, fuel and other items and services.

Apart from a discounted PEG and P/E, ACI currently has a Zacks Rank #2 and has a Value Score of A. Albertsons Companies 2023 expected revenue growth rate is 7.8%.

Teck Resources: Vancouver, Canada-based Teck Resources is a diversified resource company committed to mining and mineral development with business units focused on steelmaking coal, copper, zinc and energy. Teck Resources' principal products include steelmaking coal; copper concentrates and refined copper cathodes; refined zinc and zinc concentrates; energy products, such as bitumen; and lead concentrates.

Teck Resources has an impressive long-term historical growth rate of 21.3%. TECK stock currently has a Value Score of A and carries a Zacks Rank of 2.

United Rentals: Headquartered in Stamford, CT, United Rentals is the largest equipment rental company in the world, with an integrated network of 1,390 rental locations in the United States, Canada and Europe. Moreover, it operates in 49 states and every Canadian province.

United Rentals currently holds a Zacks Rank #1 and has a Value Score of B. It also has an impressive five-year historical growth rate of 22.1%.

Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.

The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

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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/2048202/5-peg-based-value-stocks-to-pick-for-your-portfolio-now

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

About Screen of the Week

Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine.  But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.

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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer. Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. 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. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance  for information about the performance numbers displayed in this press release.

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Archer Daniels Midland Company (ADM) : Free Stock Analysis Report

Albertsons Companies, Inc. (ACI) : Free Stock Analysis Report

Conagra Brands (CAG) : Free Stock Analysis Report

United Rentals, Inc. (URI) : Free Stock Analysis Report

Teck Resources Ltd (TECK) : Free Stock Analysis Report

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