5 Value Stocks to Buy Now as Fed Debates Next Rate Move

The S&P 500 index closed higher yesterday as investors tried to make sense of mixed signals from the Federal Reserve. Policymakers kept interest rates unchanged at their latest meeting, but there is no clear agreement on what comes next. While several officials are open to raising rates again if inflation remains sticky, others are willing to cut if price pressures continue to ease. At the same time, discussions around artificial intelligence have added another layer of complexity.

Recent data has only added to the uncertainty. Inflation cooled more than expected in January, yet job growth stayed strong and unemployment fell. With the Fed’s next decision due in mid-March, volatility may persist. In this backdrop, value investing—focused on strong fundamentals, reasonable valuations and long-term strength—is the need of the hour.

Value investing means buying stocks that are priced below what they are really worth. It works on the idea that markets often misprice stocks, giving investors a chance to buy low and profit later. DaVita DVA, Ford F, Centerra Gold CGAU, Southwest Airlines LUV and Patria Investments Limited PAX are a few solid high-value picks with high earnings yields.

Earnings Yield Strength

One simple tool value investors use is earnings yield. It shows how much profit a company makes for each dollar of its stock price. Earnings yield, expressed in percentage, is calculated as (Annual Earnings per Share/Market Price) x 100. It is the reverse of the price-to-earnings (P/E) ratio. A high earnings yield may mean the stock is undervalued. A low yield could mean the stock is too expensive.

Investors can also use earnings yield to compare stocks with bond returns like the 10-year Treasury yield. If the stock market's earnings yield is higher than the bond yield, stocks might be more attractive. With regard to this, earnings yield can be more illuminating than the traditional P/E ratio, as the former facilitates the comparison of stocks with fixed-income securities.

The Winning Strategy

We have set an Earnings Yield greater than 10% as our primary screening criterion but it alone cannot be used for picking stocks that have the potential to generate solid returns. So, we have added the following parameters to the screen:

Estimated EPS growth for the next 12 months greater than or equal to the S&P 500: This metric compares the 12-month forward EPS estimate with the 12-month actual EPS.

Average Daily Volume (20 Day) greater than or equal to 100,000: High trading volume implies that a stock has adequate liquidity.

Current Price greater than or equal to $5.

Buy-Rated Stocks: Stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have been known to outperform peers in any type of market environment. You can see the complete list of today’s Zacks #1 Rank stocks here.

Our Picks

Here we highlight five of the 55 stocks that qualified the screening:

DaVita is a leading provider of dialysis services in the United States to patients suffering from chronic kidney failure, also known as end-stage renal disease. The Zacks Consensus Estimate for DaVita’s 2026 and 2027 earnings implies year-over-year growth of 31% and 19%, respectively. EPS estimates for the current and next year have moved up by $1.59 and $2.38, respectively, over the past 30 days. DaVita currently sports a Zacks Rank #1 and has a Value Score of A.

Ford is one of the world’s legacy automakers and the third-largest seller in the United States by sales volume.The Zacks Consensus Estimate for Ford’s 2026 and 2027 earnings implies year-over-year growth of 40% and 19%, respectively. EPS estimates for the current and next year have moved up by 5 cents each over the past 30 days. Ford currently sports a Zacks Rank #1 and has a Value Score of A.

Centerra Gold is a gold mining company, focused on operating, exploring and acquiring gold properties principally in North America, Asia and other markets. The Zacks Consensus Estimate for CGAU’s 2026 and 2027 earnings implies year-over-year growth of 45% and 57%, respectively. EPS estimates for the current and next year have moved up by 5 cents and 17 cents, respectively, over the past 30 days. Centerra Gold currently sports a Zacks Rank #1 and has a Value Score of B.

Southwest Airlines is a passenger airline that provides scheduled air transportation in the United States and “ten near-international” markets. The Zacks Consensus Estimate for LUV’s 2026 and 2027 earnings implies year-over-year growth of 362% and 17%, respectively. EPS estimates for the current and next year have moved up by 17 cents and 8 cents, respectively, over the past seven days. Southwest Airlines currently sports a Zacks Rank #1 and has a Value Score of B.

Patria Investments is a private markets asset manager offering private equity, infrastructure, co-investments, real estate and credit strategies. The Zacks Consensus Estimate for PAX’s 2026 and 2027 earnings implies year-over-year growth of 25% and 17%, respectively. EPS estimates for the current and next year have moved up by 4 cents and 7 cents, respectively, over the past 30 days. Patria Investments currently sports a Zacks Rank #1 and has a Value Score of A.

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This article originally published on Zacks Investment Research (zacks.com).

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