5 Value Picks to Ride Out US-China Trade Rift & Government Shutdown
ZACKS·2025-10-13 12:35

Core Insights - The U.S. market is experiencing significant turbulence due to renewed U.S.-China trade tensions, an ongoing government shutdown, and the start of the third-quarter earnings season [1][11] - Investors are closely monitoring key reports on inflation and jobs, as well as remarks from Fed Chair Powell that may influence rate expectations [2] - Amidst these uncertainties, value investing is gaining traction, focusing on fundamentally strong companies that are undervalued [2][11] Value Investing and Earnings Yield - Earnings yield is a crucial metric for identifying attractive value opportunities, calculated as annual earnings per share (EPS) divided by the market price [4] - Stocks with higher earnings yield are considered undervalued compared to those with lower earnings yield, which are seen as overpriced [5] - A stock's yield should be compared to the 10-year Treasury yield to assess its relative value; a higher yield indicates a potentially better investment for value investors [6] Screening Criteria for Stock Selection - The primary screening criterion is an earnings yield greater than 10%, supplemented by additional parameters such as estimated EPS growth and average daily trading volume [7][8] - Stocks with a Zacks Rank of 1 (Strong Buy) or 2 (Buy) are expected to outperform peers in various market conditions [9] Top Stock Picks - Allied Gold Corporation (AAUC): Expected EPS growth of 907% and 193% for 2025 and 2026, respectively, with a Zacks Rank 1 [12] - Micron Technology Inc. (MU): Anticipated EPS growth of 100% and 12% for fiscal 2026 and 2027, respectively, also holding a Zacks Rank 1 [13] - Fortrea Holdings Inc. (FTRE): Projected EPS growth of 63.6% and 64.5% for 2025 and 2026, with a Zacks Rank 1 [14] - StoneCo Ltd. (STNE): Expected EPS growth of 20% and 17% for 2025 and 2026, respectively, and a Zacks Rank 1 [15] - HF Sinclair Corporation (DINO): Forecasted EPS growth of 257.4% and 26.4% for 2025 and 2026, with a Zacks Rank 1 [16]