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

This is the first Value Investor podcast of the new year. Every year for the first episode, Tracey has run a Zacks premium stock screen called “Classic Value Stocks with Zacks #1 and #2 Rank.”

Last year, in January 2024, this screen produced only 5 stocks. That was the lowest number it had ever produced in all the years she had run it to start January.

What’s in this screen that Tracey considers one of her favorite value stock screens?

Screening for Classic Value Stocks

This screen isn’t for the faint of heart. It’s designed to be very narrow and only give you the top value stocks. And those value stocks are going to be very cheap.

It looks for stocks that are Zacks Rank #1 (Strong Buy) and #2 (Buy) stocks. These are the top 2 Zacks Ranks. Just by including the top 2 ranks, you are going to narrow the number of stocks.

The screen also looks for a Zacks Style Score for Value of A or B. Those are also the top two style scores.

The stock must be over $5 and trade with average volume over 100,000 shares a day. And it must meet all of these value fundamentals:

·       Price-to-sales ratio under 1

·       Price-to-book ratio under 2

·       Price-to-earnings ratio under 20

·       Price/Cash Flow under 20

·       PEG under 1

It returned a whopping 14 stocks, which is one of the highest number for this screen for the January podcast.

5 Classic Value Stocks for 2025

1. Alaska Air Group, Inc. (ALK - Free Report)

Alaska Air Group had a big year in 2024 as it closed on its deal for Hawaiian Airlines in September. It now flies to over 141 destinations.

Shares of Alaska Air are up 72% over the last year but earnings are expected to rise 34% in 2025. It has an attractive forward P/E of just 11.2. Alaska Air Group is a Zacks Rank #1 (Strong Buy).

Should value investors consider an airline stock like Alaska Air Group in 2025?

2. Heidrick & Struggles Intl, Inc. (HSII - Free Report)

Heidrick & Struggles is a small cap global staffing company. Shares of Heidrick & Struggles are up 60% over the last year but it’s still cheap.

Heidrick & Struggles trades with a forward P/E of just 15.1 as earnings are expected to rise 8% in 2025. It has a PEG ratio of 0.95. A PEG ratio under 1.0 indicates a company has both growth and value.

Heidrick & Struggles is a Zacks Rank #2 (Buy) stock.

Is it time to look at some cheap small cap stocks like Heidrick & Struggles?

3. USANA Health Sciences, Inc. (USNA - Free Report)

USANA Health Sciences is the largest publicly held nutrition, personal health and wellness company. Even still, it’s a small cap company with a market cap of just $673 million.

On Dec 23, 2024, USANA announced it was acquiring Hiya for $205 million. Hiya makes children’s vitamins, minerals and supplements.

Shares fell 31% over the last year. USANA is cheap with a forward P/E of 11.4.

Through the end of the third quarter 2024, USANA had generated $47 million in free cash flow. It was also debt free.

USANA is a Zacks Rank #1 (Strong Buy).

With shares hitting new lows, is this a buying opportunity in USANA Health Sciences?

4. General Motors Co. (GM - Free Report)

General Motors, the American auto manufacturer, has been a cheap stock for years even though shares are up 41% over the last year.

Earnings are expected to rise 4% in 2025 after jumping 34.6% in 2024. General Motors trades with a dirt-cheap forward P/E of just 4.8. It also has a PEG ratio of just 0.4. A PEG ratio under 1.0 indicates both growth and value.

General Motors is shareholder friendly and paying a dividend, which is yielding 0.9%. It’s a Zacks Rank #2 (Buy) stock.

Is it too late to jump into General Motors in 2025?

5. Fresenius Medical Care AG (FMS - Free Report)

Fresenius Medical Care is a provider of products and services for people with chronic kidney failure. It’s a German company with a market cap of $13.3 billion. Fresenius Medical Care pays a dividend which yields 2%.

In 2025, earnings are expected to rise 26.3% but the shares are only up 8.4% in the last year. Fresenius Medical Care is cheap with a forward P/E of 11.6. It’s a Zacks Rank #1 (Strong Buy) stock.

Should a foreign company like Fresenius Medical Care be on your 2025 watch list?

Running Length: 00:39:54

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