Momentum is on the side of value stocks now.
For the last decade, growth stocks and momentum went hand-in-hand.
But value stocks are gaining favor, so Research Analyst Matt Clark and I found three value stocks within Green Zone Ratings that are set to crush the market going forward.
Check out these three tickers in this week’s Investing With Charles.
Here are some of the highlights from my conversation with Matt.
Ingles Markets: A Value Stock With Market-Crushing Momentum
Matt Clark: We’ve picked out three stocks to look at today.
I first walked into one of this company’s locations when I moved from my home state of Kansas to North Carolina. I was in awe.
The first stock is Ingles Markets Inc. (Nasdaq: IMKTA), a grocery store chain based in the Southeast.
It has a strong supply chain that’s not reliant on a lot of outside sources. It can haul supplies to grocery stores with ease as each location is within a day’s drive of Ingles’ distribution center in North Carolina.
So, first off, let’s look at Ingles’ Green Zone Rating.
It rates a perfect 100, the highest rating we can give a stock in our Green Zone Ratings system.
We are “Strong Bullish” on IMKTA.
In momentum, it scores an 84 — right in the sweet spot. For volatility, it scores a 96.
But focus on value. It rates a near-perfect 99 on our value metric.
Looking at momentum, we can see a nice uptrend throughout the second half of 2021 on IMKTA’s stock chart.
Ingles Achieves Maximum Momentum
Starting around August, IMKTA took off up until the end of December when the overall stock market started to pull back.
Ingles sank to start 2022, but we saw a resurgence of that uptrend in February before it dipped a bit to start this month.
In terms of its metrics, I want to focus on IMKTA’s trading multiples: price-to-earnings, price-to-sales and price-to-book.
Ingles’ ratios are all significantly lower than its peers. For example, IMKTA is trading at a price-to-earnings ratio of just under 8, and the broader industry average is 15.26.
So, you see it’s trading at around half the industry average. Its price-to-sales ratio of 0.3 is well below the 0.8 industry average. And its price-to-book is trading at 1.49. Its peers are averaging 2.3.
Ingles is trading at a much better value than even its other grocery store peers.
I’m bullish on it. It’s a great grocery store chain, and I think it’s got a lot of room to grow.
Ingles’ 52-week high is right above $92 ($10 higher than its current share price), and I think it’s going to hit that and maybe even blow through that resistance here in the coming months.
Charles: I second your enthusiasm for this value stock.
This is the kind of sector that it makes sense to be in these days.
People are looking for tried and true, low-tech, simple businesses. And you don’t get much simpler than a grocery store chain.
I think that is a smart place to be.
Where to Find Us
Coming up this week, Matt will have more on The Bull & The Bear podcast, so stay tuned. Don’t forget to check out our Ask Adam Anything video series, where Chief Investment Strategist Adam O’Dell answers your questions.
You can also catch Matt every week on his Marijuana Market Update. If you are into cannabis investing, you don’t want to miss Matt’s weekly insights.
Remember, you can email my team and me at Feedback@MoneyandMarkets.com — or leave a comment on YouTube. We love to hear from you! We may even feature your question or comment in a future edition of Investing With Charles.
To safe profits,
Charles Sizemore Co-Editor, Green Zone Fortunes
Charles Sizemore is the co-editor of Green Zone Fortunes and specializes in income and retirement topics. He is also a frequent guest on CNBC, Bloomberg and Fox Business.