In this article, we discuss 10 cheap value stocks to buy amid market uncertainty. If you want to skip our detailed analysis of these stocks, go directly to 5 Cheap Value Stocks to Buy Amid Market Uncertainty.
After record high growth in 2021, in which the Gross Domestic Product (GDP) surged close to 7% in the fourth quarter and finished the year with an annualized gain of more than 5.5%, the US economy is fast slowing down as fears around the resurgence of virus cases, tightening monetary policies designed to curb high inflation numbers, and a volatile stock market combine to push estimates of GDP growth to near-record lows for the first quarter of 2022. In 2020, the pandemic had forced a 3.9% drop in GDP growth.
Joseph LaVorgna, a top economist who served on the National Economic Council, told news platform CNBC in early February that the economy was “decelerating and downshifting” and cautioned that a more aggressive Federal Reserve was likely to put it in a recession. Top market experts are revising their GDP forecasts. Goldman Sachs has cut GDP growth estimates for the first quarter of 2022 to 0.5% from 2%, and Bank of America has reduced this number to 1% from 4%. The latter has also called for a sharper increase in interest rates.
In this overall economic environment, it has become harder to identify stocks that are likely to give amatuer investors a good entry point into the market. For those who cannot afford the more expensive “value” equities, some of the top cheap value stocks to buy now according to hedge funds include EQT Corporation (NYSE:EQT), Nokia Corporation (NYSE:NOK), and Gates Industrial Corporation plc (NYSE:GTES), among others discussed in detail below.
Our Methodology
The companies that are best positioned to provide investors with a strong hedge against market uncertainty were selected for the list. The price-to-earnings ratio of each stock was also considered. Only those with a PE Ratio of less than 20 feature on this list. All the stocks listed below trade at under $50 per share as of February 10, 2022.
The analyst ratings and business fundamentals of each stock are also discussed to provide readers with some additional context for their investment choices. Data from around 900 elite hedge funds tracked by Insider Monkey in Q3 2021 was used to identify the number of hedge funds that hold stakes in each company.
Cheap Value Stocks to Buy Amid Market Uncertainty
10. Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 51
Real-Time Share Price as of February 10: $18.34
PE Ratio: 4.12
Ford Motor Company (NYSE:F) is a Michigan-based automaker. It is one of the favorite car manufacturers among hedge funds. At the end of the third quarter of 2021, 51 hedge funds in the database of Insider Monkey held stakes worth $1.6 billion in Ford Motor Company (NYSE:F), compared to 55 in the preceding quarter worth $2.1 billion.
Ford Motor Company (NYSE:F) announced on February 8 that it would soon start delivering the E-Transit commercial vans, an all-electric commercial vehicle that is part of a growing list of EVs that Ford Motor Company (NYSE:F) plans on making over the next few years to capture the EV market in the United States and abroad.
Just like EQT Corporation (NYSE:EQT), Nokia Corporation (NYSE:NOK), and Gates Industrial Corporation plc (NYSE:GTES), Ford Motor Company (NYSE:F) is one of value stocks that institutional investors are flocking to.
In its Q1 2020 investor letter, Greenlight Capital Fund, an asset management firm, highlighted a few stocks and Ford Motor Company (NYSE:F) was one of them. Here is what the fund said:
“General Motors (GM) was a disappointment. The damage from last year’s strike consumed most of the cash flow GM would have otherwise generated in 2019. We had expected a strong bounce back in earnings and cash flow in 2020, but the annual guidance, while meeting Wall Street expectations, was worse than we expected. Further, the cash burned during the strike needed to be re-earned in order to protect GM’s investment grade rating. Pre-crisis, there would have been, at best, a minimal share repurchase late in the year. At the analyst day, our hopes that 2020 would finally be the year were dashed. We sold our stock. Over our five-year holding period, we made a 9.6% IRR on GM. In the difficult environment, its most comparable peer, Ford, lost about half its value.”
9. Synchrony Financial (NYSE:SYF)
Number of Hedge Fund Holders: 35
Real-Time Share Price as of February 10: $44.66
PE Ratio: 5.79
Synchrony Financial (NYSE:SYF) operates as a consumer financial services firm. The firm has been paying a dividend to shareholders consistently for the past five years. In late January, it declared a quarterly dividend of $0.22 per share, in line with previous. The forward yield was 1.91%. The dividend is payable to shareholders by late February.
Hedge funds have been turning bullish on Synchrony Financial (NYSE:SYF) as interest rates rise. At the end of the third quarter of 2021, 35 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in Synchrony Financial (NYSE:SYF), compared to 39 in the preceding quarter worth $1.5 billion.
8. Equitable Holdings, Inc. (NYSE:EQH)
Number of Hedge Fund Holders: 46
Real-Time Share Price as of February 10: $36.26
PE Ratio: 5.56
Equitable Holdings, Inc. (NYSE:EQH) is a diversified financial services company. There is positive hedge fund sentiment around the firm. At the end of the third quarter of 2021, 46 hedge funds in the database of Insider Monkey held stakes worth $1.70 billion in Equitable Holdings, Inc. (NYSE:EQH), up from 45 in the preceding quarter worth $1.75 billion.
On January 25, Jefferies analyst Suneet Kamath initiated coverage of Equitable Holdings, Inc. (NYSE:EQH) stock with a Buy rating and a price target of $44, noting that there was potential for the shares to go up as the firm made disclosures about wealth management and employee benefits segments.
7. Flex Ltd. (NASDAQ:FLEX)
Number of Hedge Fund Holders: 35
Real-Time Share Price as of February 10: $17.71
PE Ratio: 8.65
Flex Ltd. (NASDAQ:FLEX) provides supply chain services and solutions. The firm has come under increased spotlight in recent months as supply chain disruptions due to the pandemic and the rapid digitization of the world force businesses to turn towards creative supply chain management. The firm posted market-beating earnings in 2021.
Flex Ltd. (NASDAQ:FLEX) has also come under the radar on Wall Street. At the end of the third quarter of 2021, 35 hedge funds in the database of Insider Monkey held stakes worth $1.1 billion in Flex Ltd. (NASDAQ:FLEX), compared to 43 the preceding quarter worth $1.4 billion.
In its Q4 2020 investor letter, Sound Shore Management, an asset management firm, highlighted a few stocks and Flex Ltd. (NASDAQ:FLEX) was one of them. Here is what the fund said:
“Our third quarter addition of contract manufacturer Flex provides a great example. Originally an electronics-focused outsource manufacturer with highly cyclical cash flows and short product lifecycles, the company has evolved its customer base toward the capital goods, automotive and healthcare industries. Having successfully recast itself as a longer-cycle, “new industrial,” Flex’s stock is benefitting from more stable and diversified cash flows and more consistent revenue growth. CEO Revathi Advaithi joined in early 2019 and she has refocused the company by accelerating the transition to these longer-cycle businesses. Moreover, the company has been shareholder oriented, using the company’s ample free cash to reduce shares outstanding by 35% in the last decade. Lastly, Flex’s Nextracker division should provide nice upside. The solar tracking company manufactures motors, software and systems for utility-scale power generation projects and business is growing quickly as the shift toward sustainable energy sources hastens. We believe Nextracker is underappreciated and could represent a significant amount of hidden value. At 13 times earnings Flex is a very attractive risk reward opportunity.”
6. Herbalife Nutrition Ltd. (NYSE:HLF)
Number of Hedge Fund Holders: 38
Real-Time Share Price as of February 10: $41.45
PE Ratio: 9.74
Herbalife Nutrition Ltd. (NYSE:HLF) offers nutrition solutions. Major hedge funds have been pouring into the stock. At the end of the third quarter of 2021, 38 hedge funds in the database of Insider Monkey held stakes worth $1.8 billion in Herbalife Nutrition Ltd. (NYSE:HLF), compared to 40 in the previous quarter worth $2 billion.
Herbalife Nutrition Ltd. (NYSE:HLF) posted earnings for the third quarter in early November, reporting earnings per share of $1.21, beating estimates by $0.15. The revenue over the period was $1.43 billion.
Alongside EQT Corporation (NYSE:EQT), Nokia Corporation (NYSE:NOK), and Gates Industrial Corporation plc (NYSE:GTES), Herbalife Nutrition Ltd. (NYSE:HLF) is one of value stocks that elite investors have their eye on.
In its Q3 2021 investor letter, Bronte Capital, an asset management firm, highlighted a few stocks and Herbalife Nutrition Ltd. (NYSE:HLF) was one of them. Here is what the fund said:
“Herbalife is – as we have discussed many times before – a multi-level marketing scheme selling weight-loss shakes. The idea is simple. If I replaced six meals a week with low-calorie protein shakes and I walked an extra 15km a week I would quickly lose 15-20kgs. It would be good for me. It is also well-nigh impossible to do.
One solution is to hire a personal trainer (usually of the opposite sex) and have them nag you. You will do tough stuff for an attractive member of the opposite sex. More realistically you could just have your friends nag you. And that is why this works so well as a multi-level marketing scheme. The person who sells you the shakes has an incentive to keep you on the diet.
We have looked at many distributors and we see a weight-loss program – implemented for (literally) millions of people – which works about as well as any weight-loss health program that ever existed. That still means it fails most of the time – but it works enough that we can be proud of owning this stock and the health benefits it provides. Herbalife, it turns out, grew well during COVID. This was initially a surprise to us – as we thought Herbalife depended on the personal touch to make the sale. But, instead, weight loss and associated social clubs moved online – and – in many cases were the main social outlet the customers had.”
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Disclosure. None. 10 Cheap Value Stocks to Buy Amid Market Uncertainty is originally published on Insider Monkey.
