In this article, we discuss 10 cheap value stocks to buy for 2022. If you want to skip our detailed analysis of value investing and these stocks, go directly to 5 Cheap Value Stocks to Buy for 2022.
The theory of value investing rose to fame in the initial days of the Great Depression when two finance professors, Benjamin Graham and David Dodd, wrote their book called Security Analysis. In that book, they explained a different approach to trading, where investors should track the intrinsic value of stocks rather than estimating the future prices. The idea of value investing proposed diversification of stocks, which gave investors a margin of safety. Value investing also allows traders to detach from their immediate emotions when stock prices fluctuate, and enables them to hold the stocks for long-term gains rather than buying and selling if they’re feeling wildly optimistic or pessimistic because of price volatility.
The most famous value investors in the financial space include the legendary Warren Buffett, Seth Klarman, Bill Miller, Irving Kahn, Michael Price, and Joel Greenblatt, among others. Warren Buffett set the course for value investing for modern day traders, when he invested in cheap value stocks rather than expensive growth stocks and became one of the richest men in the world. Buffet has been a known disciple of the Benjamin Graham school of value investing, and is a believer of the efficient market hypothesis.
Returns of Value Stocks in 2021
Gerard O’Reilly, CEO and CIO of the $600 billion Texas-based private investment firm, Dimensional Fund Advisors, recently noted that the Russell 2000 Value Index is outperforming the major indexes like S&P 500, Dow, and the Nasdaq Composite, and is closing in on the Nasdaq 100. He believes that small-cap and value stocks are poised to keep growing in 2022.
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According to Morgan Stanley, the Russell 1000 Value Index and the Russell 2000 Value Index were both exceeding their respective growth indexes by 10 percentage points in 2021. Higher inflation and rising yields make growth stocks less appealing to investors, and the Morgan Stanley equity analysts believe that value trade is here to stay. The rising interest rates hurt growth stocks since they need to record significant profits to justify their inflated prices, however, interest rates do not have the same impact on value stocks, which are traditionally stable companies whose valuations are based on current cash flow.
Even though growth stocks like Amazon.com, Inc. (NASDAQ:AMZN), Shopify Inc. (NYSE:SHOP), Square, Inc. (NYSE:SQ), and salesforce.com, inc. (NYSE:CRM) usually score headlines, analysts are cautioning against relying too much on growth stocks. Recently, David Neuhauser, chief investment officer at U.S. hedge fund Livermore Partners, said the following in a CNBC program:
“I think that tends to see more investors dive into the growthier assets because they believe that in a low growth world, you want to own higher growth assets that keep up with inflation, or obviously outperform inflation. I think this time is going to be a bit different.”
Some of the popular value stocks include Berkshire Hathaway Inc. (NYSE:BRK-A), Toyota Motor Corporation (NYSE:TM), Verizon Communications Inc. (NYSE:VZ), and Citigroup Inc. (NYSE:C), among others discussed in detail below.
Our Methodology
We selected companies with a price to earnings ratio of less than 10, and made sure that the securities were priced under $30.
We also took into consideration growth catalysts, analyst ratings, and Q3 earnings. The securities are ranked according to the hedge fund sentiment surrounding each stock, which was gauged out of a total of 867 elite funds tracked by Insider Monkey in the third quarter.
Cheap Value Stocks to Buy for 2022
10. Western New England Bancorp, Inc. (NYSE:WNEB)
P/E Ratio: 9.33
Price as of December 9: $8.77
Number of Hedge Fund Holders: 9
Western New England Bancorp, Inc. (NYSE:WNEB), one of the best cheap value stocks to buy for 2022, is a Massachusetts-based bank holding company, offering financial services including residential, commercial, and consumer lending, via its subsidiary named Westfield Bank.
Western New England Bancorp, Inc. (NYSE:WNEB) announced earnings for Q3 on October 26. EPS for the quarter totaled $0.27, beating estimates by $0.05. The revenue over the period totaled $18.77 million, exceeding estimates by $920,000, up 17.35% from the prior-year quarter.
Jim Simons’ Renaissance Technologies is the leading stakeholder of Western New England Bancorp, Inc. (NYSE:WNEB) from the third quarter, holding 1.64 million shares worth over $14 million. Overall, 9 hedge funds were bullish on Western New England Bancorp, Inc. (NYSE:WNEB) in Q3, with total stakes amounting to almost $25 million.
Hovde Group analyst Bryce Rowe on September 17 upgraded Western New England Bancorp, Inc. (NYSE:WNEB) to Outperform from Market Perform with a $9.50 price target.
Western New England Bancorp, Inc. (NYSE:WNEB) is a notable value stock going into 2022, in addition to Berkshire Hathaway Inc. (NYSE:BRK-A), Toyota Motor Corporation (NYSE:TM), Verizon Communications Inc. (NYSE:VZ), and Citigroup Inc. (NYSE:C).
9. Barclays PLC (NYSE:BCS)
P/E Ratio: 5.92
Price as of December 9: $9.80
Number of Hedge Fund Holders: 12
A universal multinational bank, Barclays PLC (NYSE:BCS) is headquartered in London, England, and offers a range of financial services including retail banking, commercial banking, investment banking, wholesale banking, private banking, and wealth management. Barclays PLC (NYSE:BCS) operates two major divisions, Barclays UK and Barclays International.
Mike Masters’ Masters Capital Management is the leading Barclays PLC (NYSE:BCS) stakeholder from the 12 hedge funds that were bullish on the stock at the end of September 2021, holding 4 million shares worth $41.28 million.
On October 21, Barclays PLC (NYSE:BCS) reported its financial results for the nine months ending September 30. Revenue over the period totaled £16.78 billion, with Barclays PLC (NYSE:BCS) retaining robust profitability, reporting year-to-date profit before tax of close to £7 billion. The EPS came in at £0.308 for the nine months.
JPMorgan analyst Kian Abouhossein on December 6 raised the price target on Barclays PLC (NYSE:BCS) to £260 from £240 and kept an Overweight rating on the shares.
8. Chimera Investment Corporation (NYSE:CIM)
P/E Ratio: 5.73
Price as of December 9: $16.21
Number of Hedge Fund Holders: 16
Chimera Investment Corporation (NYSE:CIM) made it to the list of our best cheap value stocks because of its valuation and also because the company has consistently been paying dividends for the last 14 years, since its inception in 2007. On December 2, Chimera Investment Corporation (NYSE:CIM) announced a $0.33 dividend per common share, payable on January 27 to shareholders of record on December 30. Chimera Investment Corporation (NYSE:CIM) offers a high dividend yield of 8.13%.
Chimera Investment Corporation (NYSE:CIM) is a real estate investment trust from New York City, specializing in residential mortgage loans, asset securitization, and mortgage-related securities.
On November 3, Chimera Investment Corporation (NYSE:CIM) announced earnings for the quarter ending September 30, posting an EPS of $0.42, beating estimates by $0.05. The Q3 revenue equaled $149.23 million, up almost 21% from the preceding year quarter, outperforming estimates by $13.11 million.
The biggest Chimera Investment Corporation (NYSE:CIM) stakeholder from Q3 2021 is Arrowstreet Capital, with 4.82 million shares valued at $71.63 million. Overall, 16 hedge funds in the third quarter database of Insider Monkey were long Chimera Investment Corporation (NYSE:CIM), holding total stakes amounting to $155.62 million. This is comparable to the same number of funds in the preceding quarter, with a total stake value of $105.2 million.
7. UWM Holdings Corporation (NYSE:UWMC)
P/E Ratio: 0.48
Price as of December 9: $6.88
Number of Hedge Fund Holders: 16
As a wholesale lender, UWM Holdings Corporation (NYSE:UWMC) facilitates residential mortgage loans and provides lending advisory services in collaboration with independent mortgage brokers, correspondents, small banks, and local credit unions. UWM Holdings Corporation (NYSE:UWMC) is one of the best cheap value stocks to buy for 2022, with a price to earnings ratio of 0.48 and a stock price of $6.88 as of December 9.
UWM Holdings Corporation (NYSE:UWMC) posted its Q3 results on November 9. Earnings per share amounted to $0.16, exceeding EPS estimates by $0.04. The revenue over the period equaled $690.31 million, beating estimates by $61.53 million.
UBS analyst Brock Vandervliet on October 15 initiated coverage of UWM Holdings Corporation (NYSE:UWMC) with a Buy rating and a $8.50 price target. According to the analyst, the company is a “winner” and a “category killer” in the wholesale space, and its market share gains are not yet factored into the stock price. Vandervliet also observed that UWM Holdings Corporation (NYSE:UWMC)’s valuation is “compelling”, with the stock trading near all-time low valuations.
For beginner investors, who might find stocks like Amazon.com, Inc. (NASDAQ:AMZN), Shopify Inc. (NYSE:SHOP), Square, Inc. (NYSE:SQ), and salesforce.com, inc. (NYSE:CRM) expensive and overvalued, UWMC is a suitable investment option.
At the end of September this year, 16 hedge funds reported owning stakes in UWM Holdings Corporation (NYSE:UWMC), valued at $32.1 million. This is compared to 20 funds being bullish on the stock in Q2, holding total stakes amounting to $66.7 million.
6. Old Republic International Corporation (NYSE:ORI)
P/E Ratio: 5.16
Price as of December 9: $24.42
Number of Hedge Fund Holders: 20
Old Republic International Corporation (NYSE:ORI), on October 28, reported earnings for the third quarter. EPS in the period totaled $0.79, beating estimates by $0.16. The Q3 revenue jumped 17.05% year-over-year to $2.20 billion, exceeding estimates by roughly $348 million.
Old Republic International Corporation (NYSE:ORI) is an insurance holding company that operates 19 subsidiaries which are primarily involved in marketing, underwriting, and providing risk management services for a wide variety of coverages, mainly in the property and title insurance fields.
Offering a forward dividend yield of 3.61%, Old Republic International Corporation (NYSE:ORI) declared on November 24 a $0.22 per share quarterly dividend, payable on December 15 to shareholders of record on December 6.
Billionaire Ken Griffin’s Citadel Investment Group holds one of the largest positions in Old Republic International Corporation (NYSE:ORI), with 3.30 million shares worth $76.5 million. Overall, 20 hedge funds tracked by Insider Monkey were bullish on the stock in Q3, with total stakes valued at $357.5 million.
Unlike expensive growth stocks like Amazon.com, Inc. (NASDAQ:AMZN), Shopify Inc. (NYSE:SHOP), Square, Inc. (NYSE:SQ), and salesforce.com, inc. (NYSE:CRM), Old Republic International Corporation (NYSE:ORI) is a cheap value play.
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Disclosure: None. 10 Cheap Value Stocks to Buy for 2022 is originally published on Insider Monkey.
