3 Earnings Play Stocks To Buy Now

Last week, the S&P 500 officially erased all of the losses it had experienced following the outbreak of the war with Iran. The benchmark index rose by 4.70% on the week, and while the geopolitical landscape is still contentious and rapidly changing, the worst-case scenario seems to have been priced out. The VIX, a measure of expected market volatility, has also retreated to levels below 20 for the first time since February.

There’s an interesting pattern to be found in JP Morgan’s year-to-date (YTD) performance data. While the brunt of the market’s attention is focused on mega-cap growth stocks, value stocks have actually been outperforming them by a significant margin since the start of the year. The disparity is especially pronounced in mid-cap and small-cap names.

This is a broad overview — but it does beg the following question. If value stocks, in general, are performing like this, then what does the performance of exceptionally strong value tickers look like? Moreover, how can you identify stocks like those, but before they start seeing momentum? Thankfully, it’s more than doable — all you have to do is turn to …

Value Stock Strategy

Our proprietary quant rating system uses 115 unique factors to evaluate 4,600 stocks on a daily basis. Those insights are put together to form a simple, intuitive metric — a stock’s Zen Rating.

Only the top 5% of stocks are given a Zen Rating of A, equivalent to a Strong Buy rating. The next 15% are given a B rating, which is equivalent to a Buy Rating. The first category has roughly 230 stocks for you to consider on any given day — the second has 690.  It’s a great start, but there’s still room to optimize, refine, and hasten up your research. The simplest way to do that is to take a look at our exclusive Zen Strategies.

Each Zen Strategy is a carefully-built portfolio consisting of just 7 rigorously selected stocks. Since we’re looking for undervalued equities, today you’ll get a sneak peek at our Value Stock Strategy.

Our Value Stock portfolio has an all-time annual return of 24.64%. Right now, it’s on a roll — since the beginning of April, it has secured a 15.10% return — leaps and bounds above both the S&P 500 and the average value stock.

Let’s take a look at 3 promising tickers from this strategy.

Herbalife (HLF)

Herbalife is a dietary supplement titan. Right now, it ranks in the top 5% of the stocks that we track. What makes this an enticing pick are two A grades in the Component Grades — Value and Financials.

When it comes to Value, the stock ranks in the top 1% overall, due to an extremely low price-to-earnings (P/E) ratio of 7.67x. The company has also recently announced an $800 million secured note offering and a refinancing plan — another cherry on top of an already impressive placement in the top 3% of stocks for Financials.

One thing to note here is the valuation relative to growth prospects. The price-to-earnings growth (PEG) ratio stands at 0.6x. While HLF gets a C for Growth, it ranks in the 71st percentile in that regard — equivalent to or better than 71% of stocks. The last advantage to note is an above-average Safety rating — here, the stock also gets a C, but ranks in the top 18%.

So, what’s the downside? The stock’s weakest area is Sentiment — although the average analyst price target does imply a decent upside of 9.6%. However, the recent refinancing plan, coupled with promising preliminary Q1 results could go a long way in bolstering HLF on that front. The next earnings report is due May 6 — and if everything goes well, the current discount could easily slip away.

Ironwood Pharmaceuticals (IRWD)

Ironwood Pharmaceuticals develops and commercializes gastrointestinal treatments and drugs. IRWD currently carries a Zen Rating of B, and ranks in the top 9% of the stocks that we track in terms of overall fundamentals. Right now, it’s the 10th highest-rated stock in the Pharmaceutical industry, which has an Industry Rating of A.

Let’s start with the star of the show — the valuation. At a PEG ratio of 0.25x, Ironwood Pharmaceuticals is incredibly undervalued relative to growth prospects, putting it in the top 1% of stocks in terms of Value. Like our previous pick, it also boasts a fortress balance sheet — which places it in the 96th percentile for Financials.

Sentiment is another area where IRWD shines. Here, it ranks in the top 23%, and the average Wall Street price target currently implies an upside of more than 70%.

The downsides here are a low score for Safety and an average score for Growth. The latter of the two is cancelled out by the valuation relative to growth prospects, but the point about low Safety stands — expect volatility and a bumpy ride.

IRWD has outperformed EPS estimates for 3 quarters in a row, and by significant margins. The next earnings report is due April 30 — and it could prove to be a potent near-term catalyst.

Riley Exploration Permian (REPX)

Our last pick is Riley Exploration Permian, an oil & gas exploration and production company focused on … you might have guessed it, the Permian basin. REPX currently ranks in the top 7% of the stocks that we track.

Like the previous two picks, Riley Exploration Permian shines when it comes to Value and Financials. Top 1% for the former, and top 2% for the latter. The stock is trading at a P/E ratio of just 4.4x, and the PEG ratio is 0.9x. On the balance sheet side of things, the company has seen significant margin growth as of late, coupled with a steady paying down of debt. The debt-to-equity (D/E) ratio currently stands below 1.

Here’s what makes REPX stand apart — it also ranks quite well for Sentiment and Artificial Intelligence. It gets a solid B and ranks in the top 16% for Sentiment thanks to an average analyst price target that implies an upside of almost 48%. Our Artificial Intelligence Component Grade is derived from the findings of our in-house neural network, trained on more than two decades of market data to identify outperformers. There, REPX ranks in the top 12% of stocks.

The caveat with Riley Exploration Permian is that it currently gets a D for Growth since it’s in a cyclical industry — which also nets it a C rating for Safety. However, looking at the big picture, the company has outperformed its industry in terms of revenue and earnings growth in the past 5 years by a considerable margin — and right now you can grab it at a hefty discount. The next earnings call is due May 06 — so if you’re still on the fence, we’ll get some additional visibility into this one soon.

Interested In More Great Stock Picks? 

The 3 stocks highlighted above are just a fraction of what you get from our proven Value Stock strategy.

That’s because each day our system recalibrates — and Zen Strategies members get access to the top 7 technology stocks based on 115 different parameters that point to outperformance. 

See all Top 7 Value stocks here >

However, maybe value stocks aren’t what you’re after right now. Perhaps you would like to see all 11 of our market beating strategies including Growth, Momentum, Value, and our coveted AI Factor model. 

Each featuring the top 7 stocks.

Each featuring tremendous performance

We spell it all out in this timely presentation below that lives up to its name:

10 Minutes a Month to Beat the Market > 

What to Do Next?

• 77 Best Stocks NOW! >
• Options Trading with the Zen Ratings >
• 2 New Stocks to Buy from Steve Reitmeister >

Want to get in touch? Email us at news@wallstreetzen.com.