4 Great Industrial Value Picks Under $20 For Your Portfolio

The steadily improving U.S. economy will likely bring to the forefront some winners across the equity universe in 2017. However, the broader market is faced with trying times, thanks to external factors like oil price volatility, simmering tension with North Korea and the damaging hurricanes.

Consequently, investors must not invest their money on typical bets without a clear roadmap.

A number of stocks might look promising on the surface, however among those, many might not have enough potential to outperform the market.

The Industrial sector has been an impressive performer since the Presidential election. Certain aspects such as President Trump’s intentions to boost U.S. infrastructure spending, as well as the recovering economy in China are anticipated to bolster performance of a number of industrial stocks in the near term.

The industrial stocks in the S&P 500 Group performed fairly well in the Q2 earnings season. On an average, the sector recorded 18.8% rise in earnings and 13.6% upside in revenues on a year-over-year basis in the quarter, compared to the respective tallies of 11.2% and 5.6% for the benchmark S&P 500 index.

However, is this enough to invest in any industrial stock?

Value Investing

We believe that investors would do fairly well by investing in less risky industrial stocks rather than opting for the uncertain ones. Henceforth, value stocks could essentially be a safer bet at this moment, given the penchant for steady growth momentum and price.

Value investing provides an opportunity to foray into the market and grab stocks which are not noticed by most investors. These stocks often yield sound dividends, possess low price/earnings ratios and have concrete outlooks.

Moreover, it would be more reasonable to invest in stocks which are trading at bargain prices because the current market uncertainty is yet to be addressed. Investors would be able to buy a large number of shares of a company, if they provide prime focus on less expensive stocks.

The Underlying Metrics

Through our latest style score system , we have narrowed down four stocks that might prove to be a boon for value investors.

Our Value Style Score brings about all valuation metrics into one actionable score that assists investors steer clear of ‘value traps’ and spot stocks that are actually trading at a discount.

Back-tested results show that stocks with Value Style Scores of A, when pooled with a Zacks Rank #1 (Strong Buy) or #2 (Buy), offer the best investment opportunities.

All these value bets listed below carry a solid Zacks Rank and an attractive Value Style Score.

Additionally, these stocks are currently trading below $20, which makes them more rewarding.

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Our Picks

Kawasaki Heavy Industries, Ltd. (KWHIY), along with its subsidiaries, produces and sells specialized industrial goods and transportation equipment globally.

Zacks Rank: #1

Value Score: A

Last Closing Price: $12.55

IHI Corporation (IHICY), with its subsidiaries, sells and manufactures machinery and equipment in Japan and other overseas markets, including the United States.

Zacks Rank: #1

Value Score: A

Last Closing Price: $13.65