In this article, we discuss 10 undervalued non-tech stocks to buy in 2022. If you want to read about some more non-tech undervalued stocks, check out 5 Undervalued Non-Tech Stocks to Buy in 2022.
Inflation-related risks to the stock market and a war in Europe have made people in the United States pessimistic about economic growth. A recent survey from insurance firm AllianzLife reveals that 6 out of 10 adults in the United States are concerned that a major recession is “right around the corner”. Economic experts also concur with this viewpoint. Wells Fargo CEO Charlie Scharf recently said during a Wall Street Journal event that it was going to be “hard to avoid some kind of recession” as the Fed moves to aggressively raise rates to keep prices in check.
There are other signs of a recession as well. The stock market is sliding, with the benchmark S&P 500 down over 18% so far this year. Economic activity is shrinking as well, and the US GDP declined at a 1.4% annualized rate in the first three months of 2022. Inflation in the US jumped to a record high of 8.5% in March, breaking a 40-year record. The central bank has stepped in to address the crisis by announcing the biggest rate hike in 22 years and plans to reduce the balance sheet by $9 trillion. Fed chief Jerome Powell is leading this response.
In a recent interview with Marketplace host Kai Ryssdal, Powell underlined that what the Fed was doing was designed to control demand, noting that the decisions made by the central bank could not directly influence supplies. He also stressed that geopolitical events were weighing heavily on the economy. Powell claimed that the actual factors on which a “soft landing” for the economy depended might be “out of control” of the central bank. However, he added that the Fed has a “strong desire” to bring inflation under control.
Powell has previously pointed to the labor market and strong consumer spending as bright spots that might reduce the pain associated with reducing inflation. In this situation, investors are flocking to safe value stocks that offer strong cash flows for some respite from market volatility. Some of the best non-tech undervalued stocks to buy in 2022 according to hedge funds include Starbucks Corporation (NASDAQ:SBUX), AT&T Inc. (NYSE:T), and Exxon Mobil Corporation (NYSE:XOM).
Our Methodology
These were picked using the Price-to-Earning (PE) ratios as of May 19. Stocks that have a PE ratio of less than 20 and strong cash flows were preferred for the list. The business fundamentals and analyst ratings of each company are also discussed to provide some additional context.
Hedge fund sentiment was included as a classifier as well. Data from around 900 elite hedge funds tracked by Insider Monkey at the end of December 2021 was used to identify the number of hedge funds that hold stakes in each company.
Source: pexels
Undervalued Non-Tech Stocks to Buy in 2022
10. Univar Solutions Inc. (NYSE:UNVR)
Number of Hedge Fund Holders: 34
PE Ratio: 8.51
Univar Solutions Inc. (NYSE:UNVR) markets commodity and specialty chemical products. The firm posted earnings for the first quarter of 2022 on May 9, reporting earnings per share of $1.07, beating analysts’ expectations by $0.30. The revenue for the period was $2.88 billion, up more than 33% compared to the revenue over the same period last year and beating expectations by $270 million. The firm expects adjusted earnings to be between $270 million and $290 million for the second quarter of 2022.
On March 22, Bank of America analyst Steve Byrne upgraded Univar Solutions Inc. (NYSE:UNVR) stock to Buy from Underperform and raised the price target to $41 from $32, citing a shift towards specialty products in the market.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Lyrical Asset Management is a leading shareholder in Univar Solutions Inc. (NYSE:UNVR), with 5.3 million shares worth more than $151 million.
Just like Starbucks Corporation (NASDAQ:SBUX), AT&T Inc. (NYSE:T), and Exxon Mobil Corporation (NYSE:XOM), Univar Solutions Inc. (NYSE:UNVR) is one of the stocks that elite investors are buying.
In its Q4 2021 investor letter, Rhizome Partners highlighted a few stocks and Univar Solutions Inc. (NYSE:UNVR) was one of them. Here is what the fund said:
“Univar Solutions Inc. (NYSE:UNVR) reported a sharp rebound in performance relative to 2020. The company has largely completed its integration of the Nexeo acquisition, with little business interruption, a sharp contrast to Calumet Specialty’s experience. Univar is starting to show its true earnings power.”
9. Valvoline Inc. (NYSE:VVV)
Number of Hedge Fund Holders: 39
PE Ratio: 12.75
Valvoline Inc. (NYSE:VVV) markets automotive maintenance products. In early April, the company announced that it had renewed a pre-existing partnership with baseball team Toronto Blue Jays. As part of the new agreement, the marketing rights have been extended and the Valvoline brand will be displayed behind the home plate during all regular season home games. The firm also plans to display LED signage during select home games to increase presence on the pitch further.
On May 12, JPMorgan analyst Jeffrey Zekauskas upgraded Valvoline Inc. (NYSE:VVV) stock to Overweight from Neutral and raised the price target to $36 from $30, noting the firm was doing a “good job” of passing on higher raw material costs through price increases.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Brave Warrior Capital is a leading shareholder in Valvoline Inc. (NYSE:VVV), with 7.4 million shares worth more than $279 million.
In its Q2 2021 investor letter, Wasatch Core Growth Fund highlighted a few stocks and Valvoline Inc. (NYSE:VVV) was one of them. Here is what the fund said:
“Another significant contributor was Valvoline Inc. (NYSE:VVV), a company that manufactures lubricants and car parts and operates oil-change service centers. In addition to benefiting from the economic reopening, the company has discovered the advantages of making a mobile app available. Valvoline Inc. (NYSE:VVV) customers can use the app to find the closest service center and view live estimated wait times. Certainly, the adoption of technology to improve productivity and convenience isn’t a new theme. But we see mobile digitalization as a highly disruptive innovation that creates additional relationships among companies, distributors and customers. As a result, mobile digitalization is a competitive consideration in more and more of the companies that we evaluate for investment. In the first quarter, Valvoline’s stock declined partially because investors worried about the increasing popularity of electric vehicles (EVs)—which are much less dependent on petroleum products. But the stock rebounded in the second quarter, we think partly based on the realization that EVs still represent a tiny percentage of new cars sold and an even smaller percentage of cars in service. Moreover, Valvoline Inc. (NYSE:VVV) reported strong earnings and raised projections for the future.”
8. Teck Resources Limited (NYSE:TECK)
Number of Hedge Fund Holders: 40
PE Ratio: 6.46
Teck Resources Limited (NYSE:TECK) is a diversified metals and mining firm. In late April, the company announced that it expected to generate more than $1 billion in annual benefits through a variety of tech-based transformative initiatives that are aimed at improving the operational performance, safety, and sustainability of the mining business. The rally in the prices of raw materials due to supply chain issues may raise these benefits to around $1.7 billion. The firm plans to capitalize on the long-term market growth of copper.
On May 2, investment advisory CIBC maintained a Neutral rating on Teck Resources Limited (NYSE:TECK) stock and raised the price target to C$52 from C$50. Analyst Bryce Adams issued the ratings update.
At the end of the fourth quarter of 2021, 40 hedge funds in the database of Insider Monkey held stakes worth $1.6 billion in Teck Resources Limited (NYSE:TECK), compared to 41 in the previous quarter worth $1.3 billion.
7. Capri Holdings Limited (NYSE:CPRI)
Number of Hedge Fund Holders: 43
PE Ratio: 14.23
Capri Holdings Limited (NYSE:CPRI) makes and sells branded apparel, accessories, and luxury goods. On March 9, the stock climbed over 8% after the company reaffirmed previous guidance for 2022, saying it expected revenue to be around $5.56 billion against consensus estimates of $5.57 billion, and diluted earnings per share to be around $6.00 versus estimates of $5.97. For the 2023 fiscal year, the firm guided revenue to be around $6.1 billion against estimates of $6.13 billion.
On April 19, Barclays analyst Adrienne Yih maintained an Overweight rating on Capri Holdings Limited (NYSE:CPRI) stock and raised the price target to $74 from $72, noting that the firm was one of the “only frontline retailers that had positive sales-to-inventory spreads”.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Rima Senvest Management is a leading shareholder in Capri Holdings Limited (NYSE:CPRI), with 5.3 million shares worth more than $345 million.
In its Q4 2021 investor letter, Alger, an asset management firm, highlighted a few stocks and Capri Holdings Limited (NYSE:CPRI) was one of them. Here is what the fund said:
“Capri Holdings Limited (NYSE:CPRI) is a global fashion luxury group consisting of three brands: Michael Kors, accounting for 72% of fiscal year 2021 sales, Jimmy Choo, accounting for 10% of sales, and Versace, accounting for 18% of sales. The brands cover various fashion categories, including women’s and men’s accessories, footwear, ready-to-wear, wearable technology, watches, jewelry, eyewear and fragrance products. Capri Holdings Limited (NYSE:CPRI) mainly operates within the $70 billion accessories segment of the global luxury market, which is growing 5% to 6% annually. Capri shares outperformed in the last three months of 2021 after the company reported strong results for the fiscal quarter ended September 25. Revenue, margins and earnings per share all beat management’s internal expectations, and the company raised its fiscal year 2022 outlook for all three brands, despite supply chain pressure. Capri Holdings Limited (NYSE:CPRI) also approved a new two-year share repurchase program of up to $1 billion, replacing its existing $500 million program, which had $250 million of availability remaining.”
6. Crocs, Inc. (NASDAQ:CROX)
Number of Hedge Fund Holders: 43
PE Ratio: 4.96
Crocs, Inc. (NASDAQ:CROX) markets casual lifestyle footwear and accessories. The company posted earnings for the first quarter of 2022 on May 5, reporting earnings per share of $2.05, beating analyst expectations by $0.50. The revenue for the period was more than $660 million, up over 43% compared to the revenue over the same period last year and beating estimates by $38 million. In guidance for 2022, the company said it expected to grow revenue by 20% year-on-year in 2022.
On May 6, B Riley analyst Susan Anderson maintained a Buy rating on Crocs, Inc. (NASDAQ:CROX) stock with a price target of $128, highlighting that the demand for the products of the firm remained high in North America.
At the end of the fourth quarter of 2021, 43 hedge funds in the database of Insider Monkey held stakes worth $994 million in Crocs, Inc. (NASDAQ:CROX), up from 37 in the preceding quarter worth $1 billion.
Along with Starbucks Corporation (NASDAQ:SBUX), AT&T Inc. (NYSE:T), and Exxon Mobil Corporation (NYSE:XOM), Crocs, Inc. (NASDAQ:CROX) is one of the stocks that hedge funds have their eye on.
Click to continue reading and see 5 Undervalued Non-Tech Stocks to Buy in 2022.
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Disclosure. None. 10 Undervalued Non-Tech Stocks to Buy in 2022 is originally published on Insider Monkey.
