Looking For Value In A Bull Market

We are 8.5 years into the current bull market, so every now and then, somebody raises a red flag, and for a few days we are treated to reports about the possibilities of the next recession that could usher in another bear market. But that just doesn’t seem to be happening.

For one thing, the unemployment rate is at a 16-year low. For another, personal income and personal disposable income are both on the rise according to the Bureau of Economic Analysis. Rising prices, especially for food and energy did however result in a 0.1% decline in real income in August.

The Michigan Consumer Confidence Index (MCCI) suffered a slight setback in September due to concerns about the economy in the wake of hurricanes Harvey and Irma, dropping from 97.6 in August to a still-high 95.3. "Renewed gains in incomes as well as rising home and equity values have acted to counterbalance the negative impacts from the hurricanes," Richard Curtin, chief economist for the Surveys of Consumers, said in a statement.

The housing market is in a multi-year expansion, partly because of the growing population and partly because millennials are finally settling down. The production side hasn’t been able to keep up, resulting in tight inventory and high prices. Hurricanes Harvey and Irma just made matters worse, further pressuring labor and materials supply and making production that much more difficult. While these factors made for a significantly weaker September, PWC principal Scott Volling expects a flatter market here on out with a rebound in the spring 2018 selling season.

As far as industrial production indicators are concerned, the ISM report has PMI, new orders and production indexes at 60.8%, 64.6% and 62.2%, all of which expanded from August to September. A contraction is not normally indicated until the PMI falls under 50%.

Why Value Investing Makes Sense Now

Value investing presupposes that there are companies out there that are capable of better and also taking the necessary steps to get there. So the idea is to build position in these stocks before the rest of the market does, thereby gaining the most from any subsequent upside. Naturally, the strategy is not for the rookie, but folks who have done the necessary research to identify these companies. The higher profits and ability to absorb volatility are the rewards.

Finding these stocks in a bull market can be tricky since valuations are generally on the high side. That’s where the Zacks Style Score system comes in handy. Coupled with a Zacks Rank #1 or #2 (buy rated stocks), a value style score of A or B should be able to help you make more money while avoiding value traps (getting into stocks with low valuation but because of limited potential).

5 Value Stocks to Buy Today

Here are some stocks that are worth looking at because they have a Zacks Rank #1 (Strong Buy) (You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here) and Value Score A.

Alliance Resource Partners, L.P. (NASDAQ:ARLP)

Alliance Resource is a diversified producer and marketer of coal to major U.S. utilities and industrial users. It currently operates mining complexes in Illinois, Indiana, Kentucky and Maryland. Some of its mining complexes are underground and one has both surface and underground mines. It produces a diverse range of steam coals with varying sulfur and heat content, which enables it to satisfy a broad range of specifications.

Bellway plc BLWYY

Bellway plc is engages in the building of residential houses and conducts associated trading activities. The company provides houses which includes detached, semi-detached, terraced properties, as well as town houses, apartments, bungalows and five-bedroom family homes. It operates primarily in England, Wales and Scotland. Bellway plc is headquartered in Newcastle upon Tyne, the United Kingdom.

Beijing Enterprises Holdings Ltd. BJINY

Beijing Enterprises Holdings Limited distributes and sells natural gas in the People's Republic of China. Its city gas segment is a natural gas supplier and service provider. It also has other operations. Water and environment-related services include investments, design, construction and operational management as well as production of key equipment and facilities and related overall engineering works.

The toll road business is made up of three major highways, including the Beijing Capital International Airport Expressway, Airport North Freeway and Shenzhen Guanshun Road. The beer business is an important revenue center for Beijing Enterprises Holdings.

The technology business of Beijing Holdings is comprised of a combination of electronic payment and information technology, with a portfolio of investments in solid waste disposal, environment-related services and technology incubation. Beijing Enterprises Holdings Limited is based in Wanchai, Hong Kong.

Signet Jewelers Limited (NYSE:SIG)

Signet Jewelers Ltd. is engaged in retailing of jewelry, watches and associated services. The company operates primarily in the United States, the United Kingdom, the Republic of Ireland and the Channel Islands. Signet Jewelers Ltd., formerly known as Signet Group PLC, is based in Hamilton, Bermuda.

Santander (MC:SAN) Consumer USA Holdings Inc. (NYSE:SC)

Santander Consumer USA Holdings Inc. is a technology-driven consumer finance company which focused on vehicle finance and unsecured consumer lending products. The company's vehicle finance products and services include consumer vehicle loans, vehicle leases and automotive dealer floorplan loans. Santander Consumer USA Holdings Inc. is headquartered in Dallas, Texas.

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