With the advent of April, most companies get busy preparing their financial statements, before the onset of the first-quarter 2016 earnings season. The fourth-quarter 2015 just behind us has not been very encouraging given the uncertain global macroeconomic environment, volatile energy prices and the still strong U.S. dollar. Further, most analysts expect the dark clouds of the drab economy and strong U.S. dollar to continue weighing upon the performance of companies.

Not only companies, the aforementioned factors also cast their shadows on the performance of the financial markets across the globe, which have been volatile over the past few months. However, the domestic economic data continues to give mixed signals about the health of the U.S. economy.

Recent data on gross domestic product (1.4% increase), unemployment rate (up 5% in March), income growth and momentum in the housing market, all indicate that the U.S. economy is heading in the right direction. However, the manufacturing, service and consumer spending space present a gloomy picture.

Given this uncertainty, it will be wise to invest in Value Stocks that are perceived to be “bargains” or are undervalued. In value investing, investors tend to hold a stock until it meets its target price and sometimes even longer, provided the company demonstrates continued profitability.

Using our new style score system, we have identified four value stocks which hold the potential to grow earnings by 50% or more for 2016. Our research shows that stocks with a Value Style Score of ‘A’ or ‘B’ when combined with a Zacks Rank #1 (Strong Buy) or #2 (Buy) offer the best opportunities in the value investing space.

Four Choices

Based in Waltham, MA, AMAG Pharmaceuticals Inc. (AMAG - Analyst Report) is a specialty pharmaceutical company, which focuses on the development and commercialization of drugs related to maternal health, anemia and cancer supportive care. The stock saw solid earnings estimate revisions over the past 60 days with the Zacks Consensus Estimate for 2016 rising 117.2% to $4.41 per share. The stock currently sports a Zacks Rank #1 and a Value Style Score of ‘A’. Further, the company’s earnings estimate for 2016 is expected to witness substantial 374.2% year-over-year growth.

Delta Apparel Inc. (DLA - Snapshot Report) is a leading apparel retailer offering merchandise for the entire family including a portfolio of lifestyle basics and branded active wear apparel and headwear products, across the United States and internationally. Flaunting a Zacks Rank #1 and a Value Style Score of ‘A’, this Greenville, SC-based company saw its earnings estimate for 2016 rise 50% to $1.50 per share over the past 60 days. Also, the company’s earnings estimate for 2016 is expected to grow by a whopping 294.7% year over year.

We also recommend J. C. Penney Company Inc. (JCP - Analyst Report), a retailer which offers merchandise and services to customers through its department stores, catalogs and website. This Plano, TX-based company saw its earnings estimate for fiscal 2016 move up 33.3% to 4 cents per share over the past 30 days. Further, 2016 earnings estimate for this Zacks Rank #1 company, with a Value score of ‘A’, is expected to jump 104.1% year over year.  

Last but not the least, Daqo New Energy Corp. (DQ - Snapshot Report), a manufacturer and seller of polysilicon and wafers in China, can be a prudent pick. The stock currently has a Zacks Rank #1 and a Value Style Score of ‘A’. Further, this Wanzhou, the People’s Republic of China-based company saw its earnings estimate for 2016 climb 96.8% to $3.70 per share over the past 30 days. The company’s earnings estimate for 2016 is expected to rise 63% year over year.

Bottom Line

Despite the volatility in the financial markets, we suggest these stocks with positive attributes, a strong estimate revision trend and solid earnings growth forecast, could be potentially good bets for investors.