2 Hot Value Stocks to Pick Up

Focus: STOCKS

Richard Moroney Image Richard Moroney Editor, Dow Theory Forecasts

It's starting to look like a good time to value shop; there are a lot of solid companies that are finally posting solid earnings again and represent great value, observes Richard Moroney of Upside.

Dillard’s (DDS) has delivered eight straight quarters of higher same-store sales. The retailer’s operating profit margins have widened steadily during that stretch, boosted by tighter cost controls and improved inventory management.

Dillard’s, which has repurchased 34% of outstanding shares since January 2010, operates more than 300 department stores and clearance centers in 29 states.

At less than 15 times trailing earnings, shares trade 7% below their three-year average. Dillard’s looks even more attractive based on projected growth, with per-share profits expected to surge 33% to $5.78 in fiscal 2013 ending January.

Shares trade at less than 13 times that estimate, 20% below the median for S&P 1500 department stores. For fiscal 2014, the consensus projects 9% profit growth. Dillard’s is a Best Buy.

EnerSys (ENS)
This company scores in the top 10% of our research universe for both Value and Momentum. The stock trades at a discount to three-year averages based on trailing P/E (a 27% discount) and price/sales (8%).

Relative to other makers of electrical equipment in the S&P 1500, EnerSys trades at discounts of at least 40% based on P/E ratios using trailing and expected current-year earnings.

A leading maker of industrial batteries, EnerSys has delivered eight consecutive quarters of higher operating cash flow and ten quarters of sales growth.