Zacks.com featured expert Kevin Matras highlights: Cognex, Fresh Del Monte and Xilinx

Kevin Matras explains why the market looks so 'cheap' and how to start planning your market-bottoming purchases. Stocks in this weeks article are Cognex Corporation (NASDAQ: CGNX), Fresh Del Monte (NYSE: FDP) and Xilinx, Inc. (NASDAQ: XLNX). Click here for the full story exclusively on Zacks.com: http://at.zacks.com/?id=109

Screen of the Week written by Kevin Matras of Zacks Investment Research:

This week Im writing about the value of the market.

First, I know everyone is debating whether or not were in a recession. No need to debate. I have the answer: Were not. Were in a short-term economic slowdown and the economy is still growing. With the dramatic interest rate cuts (with more possibly to follow), along with the stimulus checks, ordinary tax refunds and tax breaks for business; most economists believe the economy will be looking good in the second half.

Secondly, people are now talking about stagflation. No need to talk about it. Were not in it. In fact, at the moment were nowhere close to its historical measures. Last time we had stagflation; inflation was in the double digits, and unemployment was at 8.5%. Currently, inflation is at 2.7% and unemployment is only at 4.6%.

Now let me switch gears. People are wondering if were at a market bottom. For this one, Id say were darn close. For many stocks, its already happened. There are plenty of great stocks firmly entrenched in strong uptrends, and theres no shortage of stocks making new 52-week highs.

Heres where the cheap part comes into play. First, excluding Financials, I looked at the median projected quarter-over-same-quarter-a-year-ago period for companies in the S&P 500, and found that the estimated growth rate was 9.4%. (Even with the Financials included, it was still 7.7%.) Thats pretty good.

Then I decided to see how the P/Es stacked up to their 5-Year High P/E ratios and their 5-Year Average P/E ratios. Thats when I realized how cheap this market really is.

P/E ratios are more than 18% lower than their 5-Year average and more than 41% off of their 5-Year High.

So what to do?

Im running screens right now that are showing solid earnings forecasts (Qtr-over-same-Qtr-a-year-ago), growth rates better than their 5-Year Average and that are trading at P/Es more than 40% below their 5-Year Average.

* Est. EPS Growth Q(1)/Q(-3) greater than or equal to 10

(Qtr-over-same-Qtr-year-ago)

* Est. EPS Growth Rate F(1)/F(0) greater than or equal to 5 Yr. Avg. Historical Growth Rate

* PE / 5 Yr. Avg. PE less than or equal to .60

(i.e., PEs more than 40% below their 5 Yr. avg.)

Here are a few stocks that passed this screen:

CGNX Cognex Corp.

FDP Fresh Del Monte

XLNX Xilinx, Inc.

Discover all the stocks on this list and start finding winners on your own. You can do it. Sign up now for your free trial to the Research Wizard: http://at.zacks.com/?id=111

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.

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