Top 4 Value Stocks to Buy as Trade Tensions Still Cloud H2 Outlook

Amidst geopolitical tensions and modest market gains, value investing is gaining traction, with the Price to Cash Flow (P/CF) ratio highlighted as a key valuation metric. Zacks identified StoneCo (STNE), Centene (CNC), CVS Health (CVS), and Pfizer (PFE) as value stocks based on factors including low P/CF ratios, PEG ratios under 1, and strong Value Scores, noting their earnings resilience and positive earnings surprises, although past year performance varies significantly among them.

Analysis

The second half of 2025 has commenced with a cautious market sentiment, influenced by ongoing geopolitical tensions, particularly U.S.-China trade relations, despite modest gains observed with the S&P 500 edging up 0.41% to 5,935.94, the Nasdaq Composite increasing 0.67% to 19,242.61, and the Dow Jones Industrial Average rising 0.08% to 42,305.48. This environment has heightened the appeal of value investing strategies, with a particular emphasis on the Price to Cash Flow (P/CF) ratio, favored for its reliability over P/E as operating cash flow reflects a company's actual financial health and is less susceptible to accounting manipulations. A rigorous screening process for value stocks was outlined, including criteria such as P/CF, P/E, P/B, and P/S ratios at or below industry medians, a PEG ratio under 1, stock price above $5, substantial trading volume, a Zacks Rank of #1 (Strong Buy) or #2 (Buy), and a Value Score of A or B. Four companies meeting these criteria were highlighted: StoneCo Ltd. (STNE), Centene Corporation (CNC), CVS Health Corporation (CVS), and Pfizer Inc. (PFE). StoneCo, with a Zacks Rank #1 and Value Score B, reported an average trailing four-quarter earnings surprise of 6.4% and projects 10.9% sales growth and 5.9% EPS growth for the current year, with its shares up 5.9% in the past year. Centene (Zacks Rank #2, Value Score A) showed a 25.5% average earnings surprise, forecasts 10.2% sales growth and 1.4% EPS growth, but its shares declined 21.7% over the past year. CVS Health (Zacks Rank #2, Value Score A) delivered an 18.1% average earnings surprise, anticipates 3.5% sales growth and 12.6% EPS growth, and its shares rose 5.6% in the past year. Pfizer (Zacks Rank #2, Value Score A) had a significant 43.5% average earnings surprise, yet projects a 0.6% sales decline and a 1.6% EPS decrease, with its shares falling 20.4% in the past year, illustrating varied market performance despite strong value metrics and earnings resilience for most.

Key Decisions for Investors

• Investors should consider incorporating value-oriented strategies, emphasizing metrics like Price to Cash Flow and PEG ratios below 1, particularly given the prevailing market uncertainty and geopolitical tensions clouding the H2 2025 outlook.
• The highlighted stocks—STNE, CNC, CVS, and PFE—warrant individual assessment, as despite meeting robust value criteria and showing earnings resilience, their recent stock performances vary significantly, indicating different market perceptions or sector-specific factors.
• It is prudent to monitor evolving U.S.-China trade relations and their potential impact on broader market sentiment, which could further underscore the attractiveness of fundamentally sound value stocks that demonstrate strong cash generation.
• While the presented screening methodology offers a strong starting point, investors should conduct thorough due diligence, paying close attention to company-specific growth drivers, earnings forecasts, and risks beyond general value metrics, especially for firms like Pfizer with projected declines in sales and EPS despite positive earnings surprises.