3 Bargain Stocks You Wouldn't Want to Pass Up
The best stocks for you at any given time may not be the ones that everyone else seems to be buying.
Because everyone isn’t making the same adjustments to their portfolios that you are. They haven’t got in when you have and they’re not getting out when you are. And because everyone else doesn’t have the same investment goals. Or the same attitude to risk.
But whatever may be your personal situation with respect to your portfolio, or investment goals or risk appetite, some stocks are just too cheap to pass up.
By cheap I don’t mean the absolute dollar value. Because when you pay for a penny stock, there’s no guarantee that it will generate solid profits or appreciate in value. It may not even be a particularly well-run business.
What I mean by cheap is that at their current value, these stocks have low downside potential.
Being large caps, they’re in any case less volatile. They’re well-run operations with experienced management. Their estimates have already been adjusted for the expected softening of the economy next year and the bad news is already priced in. In fact, they’ve been beaten so far down that current prices undervalue their sales and earnings growth potential.
Analysts are optimistic about their long term (3-5 year) potential, irrespective of what might happen in the next year or so. And they also pay a dividend that can tide you over in case 2023 turns out to be tougher than we all expect right now.
So here’s the list-
Banco do Brasil S.A. BDORY
Banco do Brasil S.A. provides banking products and services for individuals, companies and public sector operators in Brazil and internationally. The company operates through Banking, Investments, Fund Management, Insurance (Insurance, Pension, and Capitalization), Payment Methods and Other segments.
The Zacks Rank #2 (Buy) stock has a Value Score of A. Value scores are generally allotted to shares that are undervalued based on various valuation criteria. These often include a consideration of the company’s growth potential.
In this case, Banco do Brasil’s price/sales (P/S) ratio is 0.47. A P/S of 1 indicates a fair valuation. A valuation of 0.47 means that investors are currently undervaluing its sales. The company’s price/earnings growth (PEG) ratio is 0.19 whereas a fair value would have been 1. Therefore, investors are significantly undervaluing its earnings growth potential.
Unlike many other risky plays, analysts expect Banco do Brasil to generate earnings growth of 17.78% in the long term. And this company also pays a dividend that currently yields 3.19%.
Deutsche Telekom AG DTEGY
Deutsche Telekom provides fixed-line and wireless telecommunication products (including terminal equipment and mobile phones) and services, Internet-based products and services, and call center services. Its five operating segments are Germany, United States, Europe, Systems Solutions and Group Development.
The Zacks Rank #1 (Strong Buy) stock has a Value Score of A.
With a P/S of 0.77 and PEG of 0.81, both its revenue and earnings growth are undervalued at this point.
Analysts are looking for long-term growth of 14.03%
Deutsche Telekom also pays a dividend that yields 3.31%.
Phillips 66 PSX
Phillips 66 is an energy manufacturing and logistics company. It operates through four segments: Midstream, Chemicals, Refining, and Marketing and Specialties (M&S).
The Zacks Rank #2 stock has a Value Score of A. It is clearly undervalued going by its P/S and PEG ratios, which are at 0.29 and 0.30, respectively.
Analysts are optimistic that the company will grow its earnings 17.59% in the long term.
Its valuation based on P/S is 0.29 and PEG is 0.30. Both support immediate appreciation in share price. If that doesn’t happen, investors still have a dividend to fall back on. And that dividend yields 3.80% right now.
Six-Month Price Performance
Image Source: Zacks Investment Research
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Deutsche Telekom AG (DTEGY) : Free Stock Analysis Report
Phillips 66 (PSX) : Free Stock Analysis Report
Banco Do Brasil SA (BDORY) : Free Stock Analysis Report
