Yahoo Finance 5 Popular Stocks on Sale: Values or Traps?
(0:30) - Finding Popular Stocks That Are On Sale
(6:45) - Tracey’s Top Stock Picks: Creating A Strong Watch List
(29:10) - Episode Roundup: PANW, LULU, TSLA, NKE, SBUX
Podcast@Zacks.com
Welcome to Episode #363 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
While the S&P 500 continues to hit new all-time highs, not every stock has been soaring in 2024. In fact, there are some that are in the red year-to-date, including some former high-fliers.
The market is ignoring these stocks. They’ve gone on sale. But are they a value or are they a trap?
How to Tell if a Stock is a Value, or a Trap
Remember, the key to telling if a stock is a true value, or if it’s a trap, is to check out the analyst earnings estimates. Is the full year consensus expected to fall year-over-year? Is the earnings growth slowing?
That usually indicates there is something going on in the business which then can translate over to the stock price.
A true value will still have rising earnings growth for this year and next.
Finding Value in Fallen Growth Stocks
Not all value stocks are classic values with low P/E, P/B, P/S or PEG ratios. Some stocks may be values because they are trading at a discount to their industry peers or because a plunge in the shares has made the company historically cheap.
This week, Tracey looks at 5 stocks that have fallen from their former glory. They are on “sale”. But are they a true deal?
5 Growth Stocks That are on Sale
1. Palo Alto Networks, Inc. (PANW)
Palo Alto Networks is one of the popular cybersecurity stocks. But after its last earnings report, the shares dropped sharply. Year-to-date, shares of Palo Alto Networks are down 4.3%.
Earnings are expected to grow 23.6% this year while sales rise another 16%. Palo Alto Networks still trades with a forward P/E of 52, even as the shares have pulled back.
Is Palo Alto Networks a value or a trap?
2. Lululemon Athletica Inc. (LULU)
Lululemon is a specialty retailer famous for its popular yoga pants. Shares plunged 17% over the last month after the company guided for next year earnings below the Zacks Consensus.
Earnings of Lululemon are still expected to rise 10.8% this year on sales growth of 12%. It has gotten cheaper on a P/E basis since the sell-off. Lululemon now trades at 27x forward earnings.
Is Lululemon a value or a trap?
3. Tesla, Inc. (TSLA)
EV sales are down and so are the shares of Tesla in 2024. Tesla shares have fallen 28.8% year-to-date.
Analysts are bearish on Tesla. In just the last week, one estimate has been cut for this year. Earnings are expected to fall 2.2% this year.
Shares aren’t cheap on a P/E basis at 59. But Tesla investors have never cared about the P/E.
Is Tesla a value or a trap?
4. Nike Inc. (NKE)
Nike shares recently plunged after the company reported its fiscal third quarter 2024 earnings. Nike is down 10.5% over the last month and over the last year, is down 23.3%.
Analysts have been adjusting their earnings estimates over the last week. 8 are higher for fiscal 2024. Nike’s earnings are expected to rise 15.2% this year. But 9 estimates have been cut for fiscal 2025 as well.
Nike trades with a forward P/E of 25. It pays a dividend yielding 1.6%.
Is Nike a value or a trap after the sell-off?
5. Starbucks Corp. (SBUX)
Starbucks shares have been under the weather for the last year. They’ve been ignored by the Street. Starbucks shares recently traded near 52-week lows, down 7.1% during that time.
Earnings of Starbucks are expected to rise 14.7% in fiscal 2024 on sales growth of 7.8%. Starbucks trades with a forward P/E of 22.5.
Is Starbucks a value or is it a trap?
What Else Do You Need to Know About Stocks on Sale?
Tune into this week’s podcast to find out.
[In full disclosure, Tracey owns shares of LULU and SBUX in her personal portfolio.]
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NIKE, Inc. (NKE) : Free Stock Analysis Report
Starbucks Corporation (SBUX) : Free Stock Analysis Report
lululemon athletica inc. (LULU) : Free Stock Analysis Report
Tesla, Inc. (TSLA) : Free Stock Analysis Report
Palo Alto Networks, Inc. (PANW) : Free Stock Analysis Report
