Buy These Value Stocks Now That Inflation Is Rising Again

Value stocks aren't always the most fashionable to own. But with markets surging through record high after record high and inflation rising off the charts, this might just be their big moment.

In an inflationary environment, companies that produce cash right now are worth far more than companies that will produce income at some point in the future.

Now that the latest CPI report showed inflation jumped 5.4% over the last 12 months, a new value stock rally could very well be in the works.

You see, value stocks have already quietly benefited from this inflationary environment.

As the Fed flooded the world with money last year to keep the economy form crashing, the cash turned out to be the fuel needed for a ferocious rally in value stocks. Stocks selling for bargain prices on a valuation basis had lagged the premier growth stocks for several years. 2020 was the year that began to turn around.

As we came into 2021, the pace accelerated as the vaccine spread, and once again buying stocks with low price/earnings (P/E) ratios has been a wildly successful strategy.

With inflation on the rise again, investors will turn away from the flashy tech stocks and speculative plays and look for quality companies with bulletproof balance sheets.

To give ourselves the highest possibility of earning outside profits, we want to pick low P/E stocks that have excellent long-term growth potential.

These value stocks all sport P/E ratios below 10, and they each have multiple catalysts that could send their share prices surging higher in the coming months...

These Value Stocks Belong in Your Portfolio Now

Tegna Inc.

Tegna Inc. (NYSE: TGNA) owns broadcast outlets. Specifically, it owns 64 television stations in 51 markets across the United States. It also provides digital content that is delivered via online mobile and social media platforms. Plus, it owns two multicast networks featuring true crime programming and documentaries.

Tegna is the largest of the top four network stations in the 20 largest metropolitan markets in the United Sates. Its stations currently reach almost 40% of the U.S. population.

That's a pretty strong business right there, but we like the value investing case in this stock even more.

Tegna has a large shareholder that is taking an activist position toward the company. Standard General owns about 10 million shares of the company and has accused management of paying themselves too much and wasting company money. Standard General also points out that Tegna has underperformed its peers since the stock was separated from Gannett Co. Inc. (NYSE: GCI) back in 2015.

Shares or TGNA are trading at less than eight times earnings. That's a textbook value stock in this overpriced environment. All it needs is a catalyst to push its valuation closer to what other stocks are trading for. The current S&P 500 average P/E ratio is a staggering 46.

Fortunately, this value stock has more than one.

If the activists prevail, we could see a much higher stock price in a takeover. If Standard General does not force a sale of the company, earnings should jump by more than 40% next year, which would help drive the price well above the current price.

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PROG Holdings Inc.

PROG Holdings Inc. (NYSE: PRG) is a financing company that used to be part of Aarons Rents, now The Aarons Company, a rent to own company. PROG offers lease to own financing through approximately 25,000 third-party point-of-sale partner locations and e-commerce websites in the United States.

It finances a wide variety of merchandise including things like merchandise, furniture, appliances, electronics, jewelry, mobile phones and accessories, mattresses, and automobile electronics.

Prog Holdings retail customers include major retailers like Best Buy Co. Inc. (NYSE: BBY), Conn's Inc. (NASDAQ: CONN), Lowes Cos. Inc. (NYSE: LOW), Overstock.com Inc. (NASDAQ: OSTK), and Guitar Center.

The total potential market for lease to own financing is about one-third of the U.S. population. The market also tends to skew young with Gen Z and Millennials as the biggest markets for lease to own financing.

Vive Financial is a division of the company that provides a variety of second-look credit products that are originated through federally insured banks. These include store credit cards for borrowers with less than perfect credit for stores like Home Depot Inc. (NYSE: HD), Bowflex, and Bob's Furniture Barn.

Vive Financial also offers funding for healthcare providers.

PROG Holdings is trading at just 10 times earnings right now. The company should be able to grow earnings at more than 20% a year for the next several years according to the analysts that cover the company.

Higher earnings along with a higher P/E multiple as institutions begin to recognize the high growth opportunity this company represents could easily double the stock price over the next year or two.

Tutor Perini Corp.

Tutor Perini Corp. (NYSE: TPC) is the ultimate infrastructure company. It builds roads, bridges, tunnels, and wastewater facilities. It builds defense installations for the U.S. government. Tutor Perini also provides drilling, foundation, and excavation support for shoring, bridges, piers, roads, and highway projects.

It builds schools and building for college campuses.

It builds sports stadiums for college and professional sports teams.

Tutor Perini has worked on train and bus stations, depots, rail bridges, track and infrastructure, and station parking structures.

It has worked on everything from hospitals to casino construction projects and everything in between.

It has worked on projects at many of our nation's airports as well.

Right now, we can buy the stock for less than seven times earnings. That won't last, especially since the federal government is on the brink of passing a major infrastructure spending bill.

When the infrastructure spending finally begins, a considerable chunk of that money will end up at Tutor Perini. That should help drive earnings and the stock price a lot higher over the next few years.

Are These "Toxic" Stocks Lurking in Your Portfolio?

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Our chief investment strategist is going live and shining a light on the specific stocks that should be nowhere near your portfolio.

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