In this article, we shall discuss the 10 best value stocks to buy now. To skip our comprehensive analysis of the global economic outlook in 2022, go directly and see 5 Best Value Stocks to Buy Now.
As of September 2022, the global economic outlook is dismal as the threat of an impending recession looms. The global macroeconomic outlook was on track for a strong, albeit uneven, recovery from the COVID-19 pandemic of 2020. However, Russia’s invasion of Ukraine in February 2022, and supply chain disruptions caused by lockdowns in China as part of their zero-COVID policy, are chipping away at any hopes for economic recovery. A recent report by Bloomberg predicts that global economic expansion will likely decline to 3.2% in 2022, slackening from initial estimates of 4.4% in January. The report further ascertains that global real GDP growth is expected to slow down significantly, from a substantial recovery of 6.3% in 2021 to 3% in 2022 and 2.9% in 2023.
Some of the most prominent hedge fund managers in the world are value investors, including the likes of Seth Klarman, Warren Buffett, and David Abrams. Provided an investor picks the right stock, value stocks are geared to provide financial stability in an otherwise recession-prone economic outlook. Some prominent value stocks include JPMorgan Chase & Co. (NYSE:JPM), Verizon Communications Inc. (NYSE:VZ), and Goldman Sachs Group Inc. (NYSE:GS).
Our Methodology
For this article, we identified some of the best value stocks to buy now by carefully examining the portfolios of the 895 hedge funds tracked by Insider Monkey at the end of Q2 2022. Then, we identified and chose 10 stocks which were trading below their perceived fundamentals, had positive ratings from Wall Street analysts, and a PE ratio less than or equal to 15. We also preferred dividend value stocks for this article.
We ensured that these stocks showed catalysts for long-term growth, focusing on positive analyst ratings, solid financials, and significant growth predictions.
Best Value Stocks to Buy Now
10. ING Groep Inc. (NYSE:ING)
Number of Hedge Fund Holders: 10
Based in Amsterdam, Netherlands, the ING Groep (NYSE:ING) is a Dutch multinational banking and financial services corporation which specializes in retail banking, direct banking, commercial banking, investment banking, wholesale banking, asset management, and insurance services. The company has an impressive history of dividend payout, which is expected to persist in the long-term. The dividend yield of the company, as of Q2 2022, is 8.08%.
On September 6, JPMorgan analyst Raul Sinha elevated the price target on ING Groep (NYSE:ING) to $13 from $12.80, maintaining an Overweight rating on the shares. ING Groep (NYSE:ING) is one of the best value stocks to buy now, with the company’s short-term profit compression acting as a long-term opportunity for the right investor.
Like JPMorgan Chase & Co. (NYSE:JPM), Verizon Communications Inc. (NYSE:VZ), and Goldman Sachs Group Inc. (NYSE:GS), ING Groep (NYSE:ING) is one of the best value stocks to buy now.
Here is what Artisan Partners had to say about ING Groep (NYSE:ING) in their Q4 2021 investor letter:
“While European bank stocks generally did well in 2021, ING performed exceptionally well—up almost 70% in euros. ING is the largest domestic lender in the Benelux and also has fintech operations with strong market positions in major markets including Australia, Germany, Spain, France, Italy and several Eastern European markets. ING is profitable, and it operates with significant excess capital that it’s accumulated over several years through retained earnings. The pandemic’s onset led to a regulatory moratorium on distributions to shareholders, who reacted by pushing the share price down to levels last seen during the 2008 financial crisis. Back in 2008, ING was thinly capitalized, overdiversified and losing money—a very different profile from its profitable and overcapitalized position in 2020. We saw this as an opportunity and increased our position, and the price rebounded 60% from the 2020 bottom. Even after that impressive gain, the shares remained cheap, trading at 58% of book value—though even that simple statistic understates the undervaluation. At the time, the bank carried an estimated €12 billion of excess capital on a market cap of €30 billion. Net of that excess capital, the shares traded at 4.6X our estimate of normalized earnings. In 2021, conditions changed. The pandemic receded, leading to relaxed regulatory restrictions on shareholder distributions. In addition, profits boomed as provisions set aside for pandemic-era credit losses proved unnecessary. Additionally, a new CEO appointed in July 2020 has done a great job focusing the business on profitable geographies. Changes to the business have both improved profitability and increased the company’s already overcapitalized balance sheet. The share price has rebounded close to book value—a much more reasonable valuation.”
9. Qorvo Inc. (NASDAQ:QRVO)
Number of Hedge Fund Holders: 30
PE Ratio (As of September 22): 11.49
Headquartered in Greensboro, North Carolina, Qorvo Inc. (NASDAQ:QRVO) is an American semiconductor company which designs, manufactures, and supplies radio-frequency systems for applications that drive wireless and broadband communications.
Qorvo Inc. (NASDAQ:QRVO) currently owns crucial patents in the 5G space and won designs with Apple, Samsung, Oppo, Honor, and many more. The company also completed MFi certification interoperability for its Ultra-Wideband solutions with the Apple U1 chips. Moreover, Qorvo Inc. (NASDAQ:QRVO) is well-leveraged to gain from the CHIPS Act. The company has its own foundry for filters, radar, advanced communications, and aerospace. Over the long-term, Qorvo Inc. (NASDAQ:QRVO) is well-leveraged within numerous double-digit growth markers.
On August 4, Craig-Hallum analyst Anthony Stoss slashed the price target on Qorvo Inc. (NASDAQ:QRVO) to $140 from $180, keeping a Buy rating on the shares. The analyst noted that Qorvo Inc. (NASDAQ:QRVO) reported roughly in-line revenues and adjusted EPS at the high-end of guidance. For September, guidance, revenues and EPS were both roughly in-line with the Street, Stoss added. Despite the fact that incremental smartphone weakness continues to take a toll on the stock, the analyst contends that IDP continues to drive upside for Qorvo Inc. (NASDAQ:QRVO).
8. Ford Motor Co. (NYSE:F)
Number of Hedge Fund Holders: 46
PE Ratio (As of September 22): 4.54
Ford Motor Co. (NYSE:F) is an American multinational automobile producer and manufacturer based in Dearborn, Michigan. It is the second largest U.S. based automaker, and the fifth-largest in the world.
On September 9, BofA analyst John Murphy lowered the price target on Ford Motor Co. (NYSE:F) to $28 from $32, maintaining a Buy rating on the stock. The analyst noted that supply chain constraints are likely to pressurize auto volumes well into 2023, with the macroeconomic environment growing more unfavorable by the day. The analyst expects the next peak in demand is more likely in 2025 than 2028, making the stock ideal for a long-term purchase. Murphy revised estimates and price objectives across his autos coverage as he projected U.S. auto sales of $13.9 million units in 2022, $15.3 million in 2023, $16 million in 2024, and $16.8 million in 2025, all down from his prior forecasts. Hedge fund sentiment for the stock has remained consistent in Q1 and Q2 of 2022, with 46 hedge funds long the stock in both quarters.
7. FedEx Corp. (NYSE:FDX)
Number of Hedge Fund Holders: 63
PE Ratio (As of September 22): 10.99
Based in Memphis, Tennessee, FedEx (NYSE:FDX) is an American multinational conglomerate holding company specializing in transportation, e-commerce, and business services. FedEx is a strong dividend payer with a yield of over 3% as of September 27.
Wall Street analysts reviewed FedEx (NYSE:FDX), conferring it with the Buy rating. This is owing to the fact that the current stock price is very affordable, and management is confident about its ability to meet the targets it set for itself for fiscal year 2025. Hedge funds have been stacking up on FedEx (NYSE:FDX) shares in Q2 2022, with 63 hedge funds long the stock, compared to 52 in the first quarter of 2022.
Here is what Artisan Partners had to say about FedEx (NYSE:FDX) in their Q3 2021 investor letter:
“Our weakest Q3 performers included FedEx. Shares of FedEx, a global shipping and logistics firm, were held back by disappointing business results as labor cost headwinds and air network disruptions overshadowed solid top-line trends. We think the company should be able to overcome these near-term issues. Importantly, FedEx has strong pricing power as it operates in a consolidated global shipping industry. In September, the company announced it would increase its shipping rates by an average of 5.9% across most of its services, which is the first time in several years that its annual increase would exceed 5.0%. The industry’s renewed pricing discipline is a welcome change, reflecting a broader commitment to earn better returns on invested capital. FedEx is also closer to fully integrating TNT, a European-focused parcel company it acquired in 2016. The market is beginning to incorporate a higher probability FedEx will fully integrate TNT, which will provide a significant boost to profits. The stock now trades at a near-trough multiple of less than 12X 2022 earnings, so we added to our position on weakness.”
6. Intel Corp. (NASDAQ:INTC)
Number of Hedge Fund Holders: 65
PE Ratio (As of September 22): 6.18
Based in Santa Clara, California, Intel Corp. (NASDAQ:INTC) is an American multinational corporation and technology giant which supplies microprocessors for computer system manufacturers like Acer, Lenovo, HP, and Dell.
Intel (NASDAQ:INTC) has a price-to-earnings (TTM) ratio of 6.18. On September 16, Intel Corp. (NASDAQ:INTC) announced that the company’s board of directors had declared a quarterly dividend of $0.365 per share ($1.46 per share on an annual basis) on the company’s common stock. The company announced that dividends will be payable on December 1 to stockholders of record on November 7.
Intel Corp. (NASDAQ:INTC) is well positioned for long-term growth and delivery, as the company is currently the biggest R&D spender in the entire semiconductor industry. And even though the increased R&D spending is eating up cash flow, Intel (NASDAQ:INTC) stock is still cheaper than other similar companies in the industry, trading at $26.34 as of September 29. The company is positioned well for successful initiative execution due to its industry-leading R&D expenditure.
This is what Baron Funds, an asset management firm, had to say about Intel Corp. (NASDAQ:INTC) in their Q2 2022 investor letter:
“Then, there is the case of Intel Corporation (NASDAQ:INTC). A blue-chip tech champion with a market capitalization of over $500 billion in early 2000, the stock was trading at a P/E multiple of 42. It was a fast-growing company whose stock price and multiple declined more or less in line with its peers. However, unlike Google, Intel’s net income has grown from $7.3 billion in 1999 to $19.9 billion in 2021, a compounded annual growth rate of just 4.7%. Its growth from the dot com era has not proven to be durable, and Intel has yet to trade at the price it attained in 1999.”
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Disclosure: none. 10 Best Value Stocks to Buy Now is originally published on Insider Monkey.
