Chicago, IL – February 18, 2025 – Stocks in this week’s article are General Motors GM, Expedia Group EXPE, Phibro Animal Health PAHC and Pilgrim's Pride PPC.
The equity markets in 2025 have been marked by intense volatility, largely driven by geopolitical tensions and renewed trade conflicts. Trump's aggressive tariff policies have escalated trade disputes with major economies, particularly China and the European Union, leading to retaliatory measures. This has disrupted global supply chains, increased production costs and ultimately dampened investor confidence.
Adding to the market unease, the Federal Reserve's recent decision to maintain interest rates at current levels has thwarted expectations. Many investors had anticipated rate cuts to counterbalance economic pressure from trade disruptions and geopolitical risks. The Fed's cautious stance suggests that it is prioritizing inflation control over short-term market stability, leaving investors uncertain about future monetary policy direction.
Periods of heightened volatility often trigger shifts in investor behavior. With growing macroeconomic uncertainties, many investors are re-evaluating their portfolio strategies. Historically, it has been seen that in times of volatility, investors tend to choose value investing over other options like growth or momentum. As soon as other investors start selling their stocks at a cheaper rate in times of market uncertainty, value investors take this as an opportunity to pick good stocks at a discounted price.
Several stocks that have surged significantly in recent times have shown the overwhelming success of this pure-play investment strategy. Here, we discuss four such stocks: General Motors, Expedia Group, Phibro Animal Health and Pilgrim's Pride.
Simple value investing, if not executed with proper diligence, can lead to value traps. A stock may appear undervalued based on traditional metrics like the price-to-earnings (P/E) ratio or price-to-book (P/B) ratio. But if the underlying business is deteriorating rather than temporarily struggling, the investment may turn out to be a poor choice.
For investors looking to escape such value traps, it is vital to determine where the stock will be headed in the next 12 to 24 months. Warren Buffett advises them to focus on the earnings growth potential of a stock. This is where the importance of a not-so-popular value investing metric, the PEG ratio, lies.
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 does not consider the 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 four out of the 11 stocks that qualified the screening:
General Motors: The company, along with its strategic partners, produces, sells and services cars, trucks and parts under four core brands — Chevrolet, Buick, GMC and Cadillac. General Motors assembles passenger cars, crossover vehicles, light trucks, sport utility vehicles, vans and other vehicles.
GM currently has a Zacks Rank #2 and a Value Score of A. General Motors also has an impressive five-year historical growth rate of 14.2%.
Expedia: Bellevue, Washington-based Expedia Group is one of the largest online travel companies in the world. Expedia's strong brand portfolio, comprising Brand Expedia, Hotels.com, Vrbo, Orbitz, Travelocity, ebookers and Wotif Group, to name a few, offers a full range of travel and advertising services to travelers, suppliers and business partners.
Apart from a discounted PEG and P/E, Exelixis currently has a Zacks Rank #2 and a Value Score of B. EXPE has a long-term expected growth rate of 18.2%.
Phibro: This global diversified animal health and mineral nutrition company provides a broad range of products for food animals, including poultry, swine, beef, dairy cattle and aquaculture. In addition to animal health and mineral nutrition products, Phibro manufactures and markets specific ingredients for use in the personal care, automotive, industrial chemical and chemical catalyst industries.
Phibro has a Zacks Rank #1 and a Value Score of A. PAHC also has an impressive five-year expected growth rate of 26.2%.
Pilgrim's Pride: This Greeley, CO-based company is engaged in the processing, production, marketing and distribution of frozen, fresh as well as value-added chicken products. The company offers its services in the United States, Mexico, France, the Netherlands, Puerto Rico and Mexico through a number of distributors, retailers and food service operators.
Apart from a discounted PEG and P/E, PPC currently sports a Zacks Rank #1 and has a Value Score of A. Pilgrim's Pride has a long-term expected growth rate of 48.2%. You can see the complete list of today's Zacks #1 Rank stocks here.
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Expedia Group, Inc. (EXPE) : Free Stock Analysis Report
General Motors Company (GM) : Free Stock Analysis Report
Pilgrim's Pride Corporation (PPC) : Free Stock Analysis Report
Phibro Animal Health Corporation (PAHC) : Free Stock Analysis Report
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