Zacks.com featured highlights include TAL Education, The RealReal, DarioHealth, HealthEquity and Energous

Investors often opt for an approach that involves picking stocks with a low price-to-earnings (P/E) ratio. This strategy is based on the notion that the lower the P/E ratio is, the higher the stock value. The reasoning behind this is straightforward — when a stock's current market price does not adequately reflect its higher earnings, it suggests potential for growth.

But there is more to this whole P/E story. Because not only low P/E, stocks with a rising P/E can also fetch strong returns. In this regard, investors can bet on the likes of TAL Education Group TAL, The RealReal REAL, DarioHealth DRIO, HealthEquity HQY and Energous WATT.

Rising P/E: A Useful Tool

The concept is that as earnings rise, so should the price of the stock. As forecasts for expected earnings come in higher, strong demand for the stock should continue to push up its prices. After all, astock's P/E gives an indication of how much investors are ready to shell out per dollar of earnings.

Suppose an investor wants to buy a stock with a P/E ratio of 30. This means that he is willing to shell out $30 for only $1 worth of earnings as he expects earnings of the company to rise at a faster pace in the future owing to strong fundamentals.

So, if the P/E of a stock is rising steadily, it means that investors are assured of its inherent strength and expect some strong positives out of it.

Also, studies have revealed that stocks have seen their P/E ratios jump over 100% from their breakout point in the cycle. So, if you can pick stocks early in their breakout cycle, you can end up seeing considerable gains.

The Winning Strategy

In order to shortlist stocks that are exhibiting an increasing P/E, we chose the following as our primary screening parameters.

EPS growth estimate for the current year is greater than or equal to last year’s actual growth

Percentage change in last year EPS should be greater than or equal zero

(These two criteria point to flat earnings or a growth trend over the years.)

Percentage change in price over four weeks greater than the percentage change in price over 12 weeks

Percentage change in price over 12 weeks greater than percentage change in price over 24 weeks

(These two criteria show that price of the stock is increasing consistently over the said timeframes.)

Percentage price change for four weeks relative to the S&P 500 greater than the percentage price change for 12 weeks relative to the S&P 500

Percentage price change for 12 weeks relative to the S&P 500 greater than the percentage price change for 24 weeks relative to the S&P 500

(Here, the case for consistent price gains gets even stronger as it displays percentage price changes relative to the S&P 500.)

Percentage price change for 12 weeks is 20% higher than or equal to the percentage price change for 24 weeks, but it should not exceed 100%

(A 20% increase in the price of a stock from the breakout point gives cues of an impending uptrend. But a jump of over 100% indicates that there is limited scope for further upside and that the stock might be due for a reversal.)

In addition, we place a few other criteria that lead us to some likely outperformers.

Zacks Rank less than or equal to 2: Only companies with a Zacks Rank #1 (Strong Buy) or 2 (Buy) can get through.

Average 20-day Volume greater than or equal to 50,000: High trading volume implies that the stocks have adequate liquidity.

Just these few criteria narrowed down the universe from over 7,700 stocks to just 52.

Here are five out of the 52 stocks:

TAL Education Group: The Zacks Rank #2 company provides K-12 after-school tutoring service in China. You can see the complete list of today’s Zacks #1 Rank stocks here.

The average four-quarter earnings surprise of TAL is 66.67%.

The RealReal:The Zacks Rank #2 company operates an online marketplace for consigned luxury goods. It offers resale product categories, including women's, men's, kids', jewelry and watches, as well as home and art products.

The average four-quarter earnings surprise of REAL is 26.57%.

DarioHealth: The Zacks Rank #2 company creates mobile and digital tools.

The average four-quarter earnings surprise of DRIO is 53.22%.

HealthEquity: The Zacks Rank #2 company HealthEquity provides integrated solutions for healthcare account management, health reimbursement arrangement and flexible spending accounts for health plans, insurance companies and third-party administrators in the United States.

The average four-quarter earnings surprise of HQY is 19.76%.

Energous: The Zacks Rank #2 company is a developer of a disruptive wire-free charging technology.

The average four-quarter earnings surprise of WATT is 10.30%.

You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.

The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

Click here to sign up for a free trial to the Research Wizard today.

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.

Zacks Investment Research

The most oversold stocks in the consumer discretionary sector presents an opportunity to buy into undervalued companies.

The RSI is a momentum indicator, which compares a stock’s strength on days when prices go up to its strength on days when prices go down. When compared to a stock’s price action, it can give traders a better sense of how a stock may perform in the short term. An asset is typically considered oversold when the RSI is below 30, according to Benzinga Pro.

Here's the latest list of major oversold players in this sector, having an RSI near or below 30.

TAL Education Group

• On Aug. 1, TAL Education posted upbeat quarterly results. “In this quarter, our core focus remains on delivering quality products and managing our online and offline operational efficiency to serve learners effectively,” said Alex Peng, TAL’s President and Chief Financial Officer. The company's stock fell around 18% over the past month and has a 52-week low of $6.81.
• RSI Value: 29.74
• TAL Price Action: Shares of TAL Education fell 0.1% to close at $7.42 on Monday.
• Benzinga Pro's real-time newsfeed alerted to latest TAL news.

The Dow Jones index closed higher by more than 200 points on Thursday. When insiders purchase or sell shares, it indicates their confidence or concern around the company’s prospects. Investors and traders interested in penny stocks can consider this a factor in their overall investment or trading decision.

Below is a look at a few recent notable insider transactions for penny stocks. For more, check out Benzinga’s insider transactions platform.

Red Robin

• The Trade: Red Robin Gourmet Burgers, Inc. President and CEO Gerard Johan Hart bought a total of 10,000 shares at an average price of $3.15. To acquire these shares, it cost around $31,526.
• What's Happening: On Aug. 22, Red Robin reported downbeat earnings for its second quarter and lowered its FY24 revenue guidance.
• What Red Robin Does: Red Robin Gourmet Burgers Inc is a restaurant operator. The company develops, operates, and franchises casual-dining restaurants and fast-casual restaurants in North America.

DarioHealth

• The Trade: DarioHealth Corp Chief Commercial Officer Steven Charles Nelson acquired a total of 10,000 shares at an average price of $0.82. To acquire these shares, it cost around $8,244.
• What's Happening: On Aug. 8, DarioHealth posted second-quarter GAAP earnings of 8 cents per share.
• What DarioHealth Does: DarioHealth Corp is a digital therapeutics (DTx) company delivering personalized evidence-based interventions that are driven by precision data analytics, software, and personalized coaching.

Nerdy

• The Trade: Nerdy Inc Director Abigail Blunt acquired a total of 49,045 shares at an average price of $0.91. The insider spent around $44,631 to buy those shares.
• What's Happening: On Aug. 8, Nerdy reported worse-than-expected second-quarter revenue.
• What Nerdy Does: Nerdy Inc is a curated direct-to-consumer platform for live online learning. Its purpose-built proprietary platform leverages technology, including AI, to connect learners of all ages to experts, delivering superior value on both sides of the network.

Read Next:

• PayPal Is A Buy, Jim Cramer Says: As For Rivian? ‘Let It Percolate’

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

The Cigna Group’s CI Cigna Healthcare division, has unveiled a new E-Treatment option via MDLIVE by Evernorth. This new treatment option will provide customers with a flexible option for urgent care through phone or video consultations. This option is available to Cigna Healthcare’s U.S. customers who have insurance coverage through an employer or individual marketplace.

This innovative service allows users to manage conditions such as allergies, urinary tract infections, and minor respiratory issues by submitting a virtual clinical interview on the MDLIVE platform. Within roughly one hour, they receive a diagnosis and personalized treatment plan. This move bodes well for CI as this would free up doctors for more serious cases, enhancing clinician productivity.

This launch aligns with Cigna’s commitment to providing convenient healthcare solutions, allowing customers to focus on their health while maintaining busy schedules. Early results indicate that 99% of patients are satisfied, and over one third are using MDLIVE's virtual services for the first time. The platform, available to many Cigna Healthcare customers at no cost, is expected to significantly boost Cigna's service appeal. Customers also have access to primary care, dermatology and behavioral.

Making care accessible in various ways is expected to enhance patient convenience and retain existing customers, along with attracting new ones. This would lead to improved top-line growth in the future. Operational efficiencies and potential reduction in any claim costs might lead to improved profitability in the future. This new launch should aid Cigna Healthcare achieve its long-term average annual adjusted earnings growth in the band of 7-10%.

Cigna’s Zacks Rank & Price Performance

CI currently carries a Zacks Rank #3 (Hold). Shares of Cigna have gained 19.5% in the year-to-date period compared with the industry’s 8.6% rise.

Stocks to Consider

Some better-ranked stocks in the Medical space are Universal Health Services, Inc. UHS, The Ensign Group, Inc. ENSG and HealthEquity, Inc. HQY. Universal Health currently sports a Zacks Rank #1 (Strong Buy), and Ensign Group and HealthEquity carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Universal Health’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 14.58%. The consensus estimate for UHS’ 2024 earnings indicates a rise of 51% from the year-ago number. The consensus mark for revenues indicates growth of 9.8% from the year-ago figure.

Ensign Group’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 1.40%. The consensus estimate for ENSG’s 2024 earnings indicates a rise of 14.1% from the year-ago number. The consensus mark for revenues implies an improvement of 13.1% from the year-ago figure.

HQY beat earnings estimates in each of the last four quarters, with an average surprise of 19.8%. The Zacks Consensus Estimate for HealthEquity’s current-year earnings implies a 36.9% increase from the year-ago reported figure. The consensus mark for its current-year revenues is pegged at almost $1.2 billion, which indicates a 17.7% year-over-year increase.

Zacks Investment Research