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Zacks Value Trader highlights: Roblox, Pinterest, Signet Jewelers, Occidental Petroleum and Micron Technology

For Immediate Release

Chicago, IL – August 12, 2022 – Zacks Value Trader is a podcast hosted weekly by Zacks stock strategist Tracey Ryniec. Each week, Tracey is joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how they impact your life. To listen to the podcast, click here: https://www.zacks.com/stock/news/1967415/cheap-stocks-values-or-traps)

Cheap Stocks: Values ​​or Traps?

Welcome to Episode #293 of the Value Investor Podcast.

  • (0:45) – Are these stocks really on sale?
  • (5:45) – Stocks to Keep on Your Watch List: Values ​​or Traps?
  • (26:30) – Episode Summary: RBLX, PINS, SIG, OXY, MU
  • [email protected]

Each week, Tracey Ryniec, the editor of the Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.

These are difficult times for value investors. Many stocks look cheap, either on a P/E basis or among growth stocks, having sold off between 20% and 60% this year.

But are these stocks really “cheap,” or is it a trap?

Definition of value stocks versus a value trap

Just because a stock has a low P/E ratio doesn’t mean it’s a value. The key to determining whether or not a stock is a value or a trap is to look at earnings estimates.

Will revenue go up or down over the next year?

A value trap is typically a company that has a low P/E ratio or is heavily sold-off but expects earnings to fall over the next year. If revenue is falling, the company isn’t as “cheap” as you think.

5 Penny Stocks: Are They Value or Traps?

1. Roblox RBLX

Roblox, the online entertainment platform popular with children and young people, recently released its second quarter results. Daily active users (DAU) grew 21% to 52 million and rose again to 58 million in July 2022, up 26% year over year.

Roblox revenue also rose 30% to $591.2 million. But it missed the result and the result is expected to be negative this year and next.

Roblox shares are down 55% year-to-date. Is it a value or a trap?

2. Pinterest PINS

Pinterest has been on a wild ride since the start of the coronavirus pandemic in 2020. Stocks rallied during lockdowns and restrictions as people stayed indoors and connected on their phones.

Revenue also rose, but in 2022, as the global economy reopened, Pinterest’s monthly active users declined and there were concerns about a slowdown in social media advertising.

Pinterest shares peaked around $89 per share and are now trading around $22. They are down 61% over the last year.

Is Pinterest a value or a trap?

3. Seal Jewelers SIG

Signet Jewelers appeared to be defying expectations that consumers would withdraw discretionary purchases by August 2022 as it revised its full-year 2023 sales guidance to 7.6-up from its earlier guidance of $8.03-8.25 billion $7.7 billion lowered.

Signet said it saw further deterioration in consumer spending in July, including at higher prices.

Signet’s shares are down 26% year-to-date. It trades at a forward P/E of just 4.8.

Is Signet a value or a trap?

4. Occidental Petroleum OXY

Warren Buffett and Berkshire Hathaway continue to add to their already sizable position at Occidental Petroleum in 2022. Berkshire now owns over 20% of the company.

In the second quarter, Occidental Petroleum reported free cash flow of $4.2 billion. It reduced its debt by 19% and launched a major stock buyback, buying $1.1 billion worth of stock through Aug. 1.

Occidental Petroleum shares have faltered over the past 3 months, gaining just 9.4% in that time. It trades at a forward P/E of just 5.9.

Is Occidental Petroleum a value or a trap?

5. Micron Technology, Inc. MU

Micron has been featured on the Value or Value Trap podcast many times over the years because the stock has often had a low P/E and semiconductors are a popular industry among investors.

Micron has also issued two guidance warnings in the last 5 weeks as inventories have risen. It’s a Zacks rank #5 (strong sell).

Micron is cheap with a forward P/E of 6.9.

But is it a value or a trap?

What else do you need to know about value stocks versus traps?

Tune in to this week’s podcast to find out.

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Tracey Ryniec is a Value Stock Strategist for Zacks.com. She is also the publisher of Insider Trader and Value Investor services. You can follow her on Twitter at @TraceyRyniec and she also hosts the Zacks Market Edge Podcast on iTunes.

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Past performance is no guarantee of future results. Every investment has inherent potential for loss. This material is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice or a recommendation to buy, sell or hold any security. No recommendation or advice is given as to whether an investment is suitable for a is suitable for certain investors. It should not be assumed that investments in any security, company, sector or market identified and described have been or will be profitable. All information is current at the time of publication and is subject to change without notice. Any views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or investment management activities for securities. These returns are from hypothetical portfolios composed of Zacks rank = 1 stocks rebalanced monthly excluding transaction costs. These are not actual stock portfolio returns. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information on the performance figures presented in this press release.

Zacks Names “Single Best Pick to Double”

From thousands of stocks, 5 Zacks experts have each selected their favorite, which will skyrocket by +100% or more in the coming months. From these 5, Research Director Sheraz Mian selects one that has the most explosive perk of all.

It’s a little-known chemical company that’s up 65% year over year, but it’s still dirt cheap. With continued demand, rising earnings estimates for 2022 and $1.5 billion in share buybacks, retail investors could jump in at any time.

This company could match or outperform other recent Zacks stocks that are set to double, such as Boston Beer Company, which is up +143.0% in just over 9 months, and NVIDIA, which is in a year boomed by +175.9%.

Free: Check out our top stocks and 4 runners-up >>

Click here to get this free report

Occidental Petroleum Corporation (OXY): Free Stock Research Report

Micron Technology, Inc. (MU): Free Stock Research Report

Signet Jewelers Limited (SIG): Free Stock Research Report

Pinterest, Inc. (PINS): Free Stock Research Report

Roblox Corporation (RBLX): Free Stock Research Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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