In this article, we will discuss the 10 most undervalued stocks to buy now. If you want to explore similar stocks, you can also take a look at 5 Most Undervalued Stocks to Buy Now.
Evercore ISI Analyst: “Post-Midterms Tend To Be Very Good For Stocks”
On November 3, senior managing director at Evercore ISI, Julian Emanuel, appeared in an interview on CNBC where he discussed the market volatility we have had in 2022 and what he sees for stocks ahead. Julian Emanuel noted that “the Fed basically came out sounding more hawkish than expected” and that rising bond yields and a strong dollar led to a major sell-off in the “yield-sensitive growth sector”. Here are some comments from Julian Emanuel about what he sees for equities moving into 2023:
“When you think about a year like this year, the ups, the downs, the rollercoasters, centered around these macro relationships… You’re likely to get a new bear market low at some point in the next six to twelve months. But given the volatility that we see and the potential for a cessation in the uptrend in yields, sometime as the Fed backs away-they will eventually back away- you could actually get a good market next year because history says that post-midterms tend to be very good for stocks among other reasons.”
Julian Emanuel thinks that “there’s a bit more room in terms of value outperformance” and is bullish on “financials, healthcare, and energy”. Julian Emanuel said that “growth is arguably still overvalued relative to value” and that “as a long-term investor, you need to be prepared to buy down another 10% and then another 10% after that.”
As of November 4, the S&P 500 has dropped 22.3% year to date, the Nasdaq has shed 35% of its value since the beginning of the year, and the Dow is down 12.38% for the year. Yields are going up and stocks are sinking to new lows. However, for the long-term investor, now might be an optimal buying opportunity to get best-in-class companies at bargain levels. This article will look at some of the most undervalued stocks to buy now, which include Intel Corporation (NASDAQ:INTC), Pfizer Inc. (NYSE:PFE), and Occidental Petroleum Corporation (NYSE:OXY).
Image by Sergei Tokmakov Terms.Law from Pixabay
Our Methodology
To determine the most undervalued stocks to buy now, we screened for best-in-class companies whose shares have weakened significantly and are now trading at a PE multiple of less than 15x. We preferred companies with solid fundamentals and long-term growth stories and along with each stock, we included the hedge fund sentiment and analyst ratings. These stocks are ranked according to their popularity among elite hedge funds.
Most Undervalued Stocks to Buy Now
10. Vale S.A. (NYSE:VALE)
PE Ratio as of November 4: 3.69
Number of Hedge Fund Holders: 27
Vale S.A. (NYSE:VALE) is a Brazilian mining and metals company that is among the largest producers of iron ore and nickel in the world. At the close of Q2 2022, 27 hedge funds held stakes in Vale S.A. (NYSE:VALE). The collective stakes of these hedge funds were valued at $1.78 billion.
On October 27, Vale S.A. (NYSE:VALE) announced earnings for the third quarter of fiscal 2022. The company reported earnings per share of $1.05 and outperformed estimates by $0.05. The company generated a revenue of $9.93 billion for the quarter. As of November 4, Vale S.A. (NYSE:VALE) has a price-to-earnings ratio of 3.69 and is among the most undervalued stocks to buy now.
On October 5, Deutsche Bank analyst Liam Fitzpatrick updated his price target on Vale S.A. (NYSE:VALE) to $19 from $20 and maintained a Hold rating on the shares.
As of June 30, Fisher Asset Management is the largest investor in Vale S.A. (NYSE:VALE) and has stakes worth $324.5 million in the company.
Some of the top names that investors can buy into weakness right now include Intel Corporation (NASDAQ:INTC), Pfizer Inc. (NYSE:PFE), and Occidental Petroleum Corporation (NYSE:OXY).
9. Barrick Gold Corporation (NYSE:GOLD)
PE Ratio as of November 4: 12.36
Number of Hedge Fund Holders: 40
Barrick Gold Corporation (NYSE:GOLD) is a leading Canadian gold mining company with operations in 18 countries. The company is among the largest gold producers in the world. As of November 4, Barrick Gold Corporation (NYSE:GOLD) has a price-to-earnings ratio of 12.36 and is awarding shareholders with a dividend yield of 5.32%. The stock is one of the most undervalued stocks to buy now.
On October 19, Stifel analyst Ingrid Rico updated her price target on Barrick Gold Corporation (NYSE:GOLD) to C$33 from C$35.25 and reiterated a Buy rating on the shares.
At the close of Q2 2022, 40 hedge funds were long Barrick Gold Corporation (NYSE:GOLD) and held stakes worth $1.13 billion in the company. Of those, First Eagle Investment Management was the top shareholder in the company and disclosed a stake of $471 million.
8. Coterra Energy Inc. (NYSE:CTRA)
PE Ratio as of November 4: 6.95
Number of Hedge Fund Holders: 40
Coterra Energy Inc. (NYSE:CTRA) is a leading American oil and gas company that is involved in the development, exploration and production of oil, natural gas, and natural gas liquids. As of November 4, the company has a market capitalization of $24.4 billion and is trading at a PE multiple of 7x. Coterra Energy Inc. (NYSE:CTRA) is among the best undervalued stocks to buy now.
This October, Jefferies analyst Lloyd Byrne took coverage of Coterra Energy Inc. (NYSE:CTRA) with a Hold rating and a $32 price target. On October 25, Stifel analyst Derrick Whitfield started coverage of Coterra Energy Inc. (NYSE:CTRA) with a Buy rating and a $40 price target.
At the end of Q2 2022, 40 hedge funds held stakes in Coterra Energy Inc (NYSE:CTRA) worth roughly $437.35 million. This is compared to 39 positions in the previous quarter with stakes worth $551.5 million.
As of June 30, Diamond Hill Capital is the largest investor in Coterra Energy Inc. (NYSE:CTRA) and has a position worth $116.4 million in the company.
Here is what Palm Valley Capital had to say about Coterra Energy Inc. (NYSE:CTRA) in its second-quarter 2022 investor letter:
“We sold two Fund positions during the quarter which includes Coterra Energy (NYSE:CTRA). As a result of surging oil and natural gas prices, Coterra reached our valuation, and we exited the position in April.”
7. Marathon Oil Corporation (NYSE:MRO)
PE Ratio as of November 4: 7.67
Number of Hedge Fund Holders: 41
Marathon Oil Corporation (NYSE:MRO) is a leading global oil and gas exploration company. On November 2, Marathon Oil Corporation (NYSE:MRO) announced earnings for the fiscal third quarter of 2022. The company reported earnings per share of $1.24 and outperformed expectations by $0.07. The company generated a revenue of $2.25 billion, up 54.65% year over year, and beat expectations by $219.5 million.
On October 18, Piper Sandler analyst Mark Lear raised his price target on Marathon Oil Corporation (NYSE:MRO) to $38 from $36 and reiterated an Overweight rating on the shares. As of November 4, the stock is trading at a PE multiple of 7x and is among the best undervalued stocks to buy now.
At the close of Q2 2022, 41 hedge funds were long Marathon Oil Corporation (NYSE:MRO) and held stakes worth $1.26 billion in the company. As of June 30, Fisher Asset Management is the top investor in Marathon Oil Corporation (NYSE:MRO) and has stakes worth $194 million in the company.
Shares of Intel Corporation (NASDAQ:INTC), Pfizer Inc. (NYSE:PFE), and Occidental Petroleum Corporation (NYSE:OXY) have pulled back in 2022 and are presenting an attractive entry point for long-term investors.
6. Ford Motor Company (NYSE:F)
PE Ratio as of November 4: 4.70
Number of Hedge Fund Holders: 46
Ford Motor Company (NYSE:F) has pulled back in 2022 and is presenting an optimal opportunity for long-term investors. As of November 4, the stock is trading at a PE multiple of 4x and is offering a forward dividend yield of 4.49%. Ford Motor Company (NYSE:F) is ranked among the most undervalued stocks to buy now.
On October 27, Morgan Stanley analyst Adam Jonas reiterated an Overweight rating and his $14 price target on Ford Motor Company (NYSE:F).
At the end of Q2 2022, 46 hedge funds held stakes in Ford Motor Company (NYSE:F). The total value of these stakes amounted to $608.7 million. As of June 30, D E Shaw has a position worth $257.6 million in the company and is the top investor.
Here is what Leaven Partners had to say about Ford Motor Company (NYSE:F) in its third-quarter 2022 investor letter:
“In our last quarterly letter, I briefly mentioned that the consensus estimates for corporate profits appeared to be a bit too sanguine. I referenced a Reuters article that reported, as of June 17, Wall Street expected S&P 500 earnings to grow by 9.6% in 2022, which was up from 8.8% in April and from 8.4% in January. That tune began to change at the end of July and accelerated in August and September, as major players, such as Ford (NYSE:F), has recently issued profit warnings and/or have withdrawn guidance. In response, Wall Street has altered its outlook: lowering third-quarter profit growth to 4.6%[2] from 7.2% in early August and slashing full-year profit growth to 4.5%.”
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Disclosure: None. 10 Most Undervalued Stocks to Buy Now is originally published on Insider Monkey.
