In this article, we discuss 12 best bargain stocks to buy in March. If you want to see more stocks in this selection, check out 5 Best Bargain Stocks To Buy in March.
Warren Buffett, the successful investor and founder of Berkshire Hathaway, recently stated that he and vice chairman Charlie Munger focus on selecting businesses rather than individual stocks. In the company’s recent shareholder letter, Buffett revealed that their investment strategy involves investing in businesses that have trustworthy managers and sustainable positive economic traits. This technique, referred to as value investing, emphasizes holding onto high-performing stocks for the long term, as opposed to actively trading based on short-term price changes.
Einhorn’s View of the Stock Market
David Einhorn, who manages Greenlight Capital, stated on March 1 that he continues to hold a bearish view on the stock market due to the possibility of rising inflation and interest rates. According to the prominent hedge fund manager, the Federal Reserve might need to take additional measures to address persistent inflation, which could result in interest rates increasing beyond what is currently expected by the majority. The central bank has already raised interest rates to a range of 4.5% to 4.75%, marking the highest level since October 2007.
Einhorn had an extremely successful year in 2022, with a return of 36.6%, which he attributed in part to his short positions in various innovative technology stocks, similar to those favored by growth investor Cathie Wood. In a recent letter to investors, he noted that 2022 was one of his best years and compared the current market conditions to the aftermath of the tech bubble in 2001. He also disclosed that he still holds short positions in certain “bubble” stocks. Although his hedge fund is currently only slightly long, he has great confidence in the value stocks in his portfolio.
Undervalued Stocks
The DEEP ETF from Roundhill is intended to enable both retail and institutional investors to invest in stocks that are significantly undervalued, with the aim of closely tracking the performance of the DEEP Index, after fees and expenses. The DEEP Index utilizes the Acquirers Multiple to identify small and micro-cap stocks that are deeply undervalued. This measure is frequently employed by activists and buyout firms to pinpoint potential targets. While prominent value stocks include Citigroup Inc. (NYSE:C), Exxon Mobil Corporation (NYSE:XOM), and JPMorgan Chase & Co. (NYSE:JPM), we discuss the best bargain stocks from the DEEP ETF in this article. The exchange traded fund has gained nearly 14.5% year-to-date as of March 6, and it has outperformed the market over the last 52-weeks as well.
Our Methodology
For the best bargain stocks to buy in March, we started with the holdings of Deep Value ETF (DEEP) and ranked them by hedge fund sentiment. We have assessed the hedge fund sentiment from Insider Monkey’s database of 943 elite hedge funds tracked as of the end of the fourth quarter of 2022. The list is arranged in ascending order of the number of hedge fund holders in each firm.
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Best Bargain Stocks To Buy in March
12. BlueLinx Holdings Inc. (NYSE:BXC)
Number of Hedge Fund Holders: 19
BlueLinx Holdings Inc. (NYSE:BXC) was incorporated in 2004 and is headquartered in Marietta, Georgia. The company distributes residential and commercial building products in the United States. BlueLinx Holdings Inc. (NYSE:BXC) distributes specialty products consisting of engineered wood, siding, millwork, specialty lumber, and panels. On February 21, the company reported a Q4 non-GAAP EPS of $3.97, beating market estimates by $0.26. The revenue of $847.77 million however missed Wall Street consensus by $91.8 million.
On February 28, BlueLinx Holdings Inc. (NYSE:BXC) and Louisiana-Pacific Corporation (NYSE:LPX) announced the expansion of its distribution partnership. The expansion includes Louisiana-Pacific Corporation (NYSE:LPX)’s Siding Solutions brands and prefinished solutions in the Southeast and Midwest Regions, specifically in Atlanta, Omaha, and Pensacola. The expanded distribution will commence later in the first quarter of 2023.
According to Insider Monkey’s fourth quarter database, 19 hedge funds were bullish on BlueLinx Holdings Inc. (NYSE:BXC), compared to 20 funds in the prior quarter. Travis Cocke’s Voss Capital is the largest stakeholder of the company, with 599,723 shares worth $42.6 million.
Like Citigroup Inc. (NYSE:C), Exxon Mobil Corporation (NYSE:XOM), and JPMorgan Chase & Co. (NYSE:JPM), BlueLinx Holdings Inc. (NYSE:BXC) is one of the top value stocks to invest in.
Voss Capital made the following comment about BlueLinx Holdings Inc. (NYSE:BXC) in its Q3 2022 investor letter:
“Coming into 2022, consensus EPS estimates for building products distributor BlueLinx Holdings Inc. (NYSE:BXC) were $10.70. Now, despite lumber prices being down ~65% YTD and new home starts down y/y, with three quarters reported as of the Q3 earnings release, it is looking like they will earn over $31 in EPS – yet the stock is down 30% this year (the stock went from >8x forward earnings to 2.1x trailing).
The average US homeowner gained $60k in home equity in the last 12 months and home equity remains the most predictive indicator for Repair & Remodeling spending (~45% of BXC’s revenues are tied to R&R).19 The median age of owner-occupied homes is at a record high of 41 years. On top of that, we are just now lapping the critical 20-year anniversary of homes built during the 2002-2006 boom, an age in a home’s life where remodeling spend takes a significant step higher. This remains an underappreciated R&R driver and we believe it is showing up in the numbers…” (Click here to read the full text)
11. Tutor Perini Corporation (NYSE:TPC)
Number of Hedge Fund Holders: 19
Tutor Perini Corporation (NYSE:TPC) is a California-based construction company that specializes in diversified general contracting, construction management, and design services to private customers and public companies worldwide. It is one of the best cheap stocks to invest in.
On November 3, B. Riley analyst Alex Rygiel raised the firm’s price target on Tutor Perini Corporation (NYSE:TPC) to $10 from $9 and maintained a Buy rating on the shares following the Q3 results, citing improved cash flow.
According to Insider Monkey’s Q4 data, Tutor Perini Corporation (NYSE:TPC) was part of 19 hedge fund portfolios, compared to 18 in the prior quarter. Cliff Asness’ AQR Capital Management is the largest position holder in the company, with 1 million shares worth over $8 million.
Miller Value Partners made the following comment about Tutor Perini Corporation (NYSE:TPC) in its Q3 2022 investor letter:
“During the quarter we also scaled up a new investment in Tutor Perini Corporation (NYSE:TPC). The company’s Civil segment is a leading provider of complex construction and rehabilitation of critical infrastructure (highways, tunnels, bridges, mass transit). Tutor has been in business for over 125 years and appears well positioned to benefit over the next couple of years from the recently passed $1.2T federal infrastructure law.
Their integrated business model provides competitive advantage in bidding, providing greater transparency in price and greater control of the large project work schedule. TPC’s stock price has been more than cut in half over the past year (near early 2020 lows) as the Covid outbreak caused a delay in larger Civil contracts. This is now weighing significantly on segment margins, creating an earnings trough this year. Tutor’s recent new business wins are helping to rebuild their pipeline (Civil segment backlog approaching $5B which is 200% higher than segment current annual revenue run-rate).
In addition, the company has been working through the legal system to litigate for past due work. While Covid delayed some legal proceedings, these outstanding cases are now being settled, having recently added more than $100M to cash flow. With $500 to $700M of outstanding receivables, ongoing settlements provide a nice margin of safety to the balance sheet. This has the potential to generate significant incremental free cash flow.…” (Click here to read the full text)
10. AMC Networks Inc. (NASDAQ:AMCX)
Number of Hedge Fund Holders: 20
AMC Networks Inc. (NASDAQ:AMCX) is a New York-based entertainment company that owns and operates a suite of video entertainment products. On February 17, the company reported Q4 non-GAAP earnings per share of $2.52 and a revenue of $964.52 million, outperforming Wall Street estimates by $1.25 and $27.45 million, respectively. Revenue over the period increased 20% on a year-over-year basis.
On February 21, Thomas Yeh, an analyst at Morgan Stanley, increased the target price for AMC Networks Inc. (NASDAQ:AMCX) from $19 to $24 and maintained an Equal Weight rating on the shares. The analyst informed investors that AMC Networks Inc. (NASDAQ:AMCX)’s decision to reset cash content spending to around $1-1.1 billion run-rate in FY23 and beyond will improve the firm’s free cash flow projections. However, there is a risk that reduced investments in content could worsen revenue challenges, the analyst told investors.
According to Insider Monkey’s data, 20 hedge funds were bullish on AMC Networks Inc. (NASDAQ:AMCX) at the end of December 2022, compared to 16 funds in the prior quarter. Mario Gabelli’s GAMCO Investors is a significant position holder in the company, with 479,676 shares worth $7.5 million.
Here is what ClearBridge Investments has to say about AMC Networks Inc. (NASDAQ:AMCX) in its Q1 2021 investor letter:
“Media has been another bright spot for the Strategy, boosted by the return of live events and subsequent rebound in advertising as well as good initial traction for several of our companies new streaming services. AMC Networks has seen strong initial subscriber growth to their over-the-top services.”
9. Masonite International Corporation (NYSE:DOOR)
Number of Hedge Fund Holders: 20
Masonite International Corporation (NYSE:DOOR) was founded in 1925 and is headquartered in Tampa, Florida. The company designs, manufactures, markets, and commercializes interior and exterior doors for the residential and non-residential building construction markets worldwide. Masonite International Corporation (NYSE:DOOR)’s Q4 non-GAAP EPS of $1.72 missed market estimates by $0.15. The revenue climbed 6.3% year-over-year to $676 million, topping Wall Street consensus by $34.99 million.
On February 24, Baird raised the firm’s price target on Masonite International Corporation (NYSE:DOOR) to $110 from $108 and kept an Outperform rating on the shares. The analyst noted that the Q4 results were a combination of positives and negatives. The company is factoring in a significant decline in volume in its forecast, but it is expected that margins will remain stable year-over-year due to cost savings, a slight decrease in material costs, and the realization of synergies, the analyst wrote in a research note.
According to Insider Monkey’s fourth quarter database, 20 hedge funds were long Masonite International Corporation (NYSE:DOOR), compared to 19 funds in the prior quarter. Kevin Oram and Peter Uddo’s Praesidium Investment Management Company is the largest stakeholder of the company, with 1.3 million shares worth $107 million.
8. Ryerson Holding Corporation (NYSE:RYI)
Number of Hedge Fund Holders: 20
Ryerson Holding Corporation (NYSE:RYI) is a Chicago-based company that processes and distributes industrial metals in the United States and internationally. On February 22, Ryerson Holding Corporation (NYSE:RYI)’s revenue of $1.29 billion exceeded market estimates by $70 million. The company also announced a first quarter 2023 dividend of $0.17 per share, a 6.3% increase from the prior quarter. It is one of the best cheap stocks to invest in.
On February 24, BMO Capital analyst Katja Jancic raised the firm’s price target on Ryerson Holding Corporation (NYSE:RYI) to $45 from $36 and reiterated an Outperform rating on the shares after its Q4 results. According to the analyst, Ryerson Holding Corporation (NYSE:RYI) has made structural improvements to its financial and operational performance, which puts it in a better position to generate higher free cash flows in the long term. This increased cash flow will allow the company to continue investing in growth and returning cash to shareholders, as per the analyst.
According to Insider Monkey’s fourth quarter database, Ryerson Holding Corporation (NYSE:RYI) was part of 20 hedge fund portfolios, compared to 17 funds in the prior quarter. D E Shaw is the biggest stakeholder of the company, with 340,038 shares worth $10.2 million.
7. American Axle & Manufacturing Holdings, Inc. (NYSE:AXL)
Number of Hedge Fund Holders: 21
American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) was founded in 1994 and is headquartered in Detroit, Michigan. The company designs, engineers, and manufactures driveline and metal forming technologies that support electric, hybrid, and internal combustion vehicles. In FY 2023, American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) is targeting sales in the range of $5.95 billion to $6.25 billion, versus a $5.98 billion consensus and adjusted EBITDA in the range of $725 million to $800 million.
On February 22, Dan Levy, an analyst at Barclays, reduced the target price for American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) from $10 to $9 and maintained an Equal Weight rating on the shares. The analyst informed investors that the company is still facing margin difficulties, particularly in metal forming.
According to Insider Monkey’s fourth quarter database, 21 hedge funds were bullish on American Axle & Manufacturing Holdings, Inc. (NYSE:AXL), compared to 17 funds in the last quarter. Jerome L. Simon’s Lonestar Capital Management is a significant position holder in the company, with 671,000 shares worth $5.2 million.
Here is what Miller Value Partners Deep Value Strategy has to say about American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) in its Q1 2022 investor letter:
“American Axle (NYSE:AXL) is a tier 1 vertically integrated supplier focused on automotive propulsion systems to support internal combustion engines, hybrid, and electric vehicles. The share price has significantly underperformed over the past couple of years, down more than 70% below its 2015 highs. The company is well positioned for a recovery in North America auto market (nearly 80% of revenues) and should benefit from ongoing consumer demand in the large truck marketplace (half of its revenue). Similar to Tenneco, American Axle has less exposure to EVs versus its peers. However, the company has been increasing new scalable electrification propulsion technologies. The marketplace appears to be providing limited value to American Axle’s innovation as well as recent new wins which secure more than $10B in revenue from 2025 to 2030. The company’s vertical integration while helping the company operate in the current challenging environment also provides nice contribution margins (more than 25%) as industry volumes improve. Management expects to generate significant free cash flow over the next couple of years. AXL’s share price looks significantly mispriced at less than 2x cash flow and approximately 50% normalized free cash flow yield. Upside potential could be multiples of AXL’s current share price as the company continues focus on de-levering their balance sheet towards 2x net debt leverage target.”
6. Anywhere Real Estate Inc. (NYSE:HOUS)
Number of Hedge Fund Holders: 21
Anywhere Real Estate Inc. (NYSE:HOUS) is a New Jersey-based provider of residential real estate services in the United States and internationally. The company operates through three segments – Anywhere Brands, Anywhere Advisors, and Anywhere Integrated Services. Although Q4 results failed to meet Wall Street consensus, the company expects to realize further cost savings of approximately $200 million in 2023.
On February 27, Keefe Bruyette downgraded Anywhere Real Estate Inc. (NYSE:HOUS) from Outperform to Market Perform and lowered its price target from $12 to $7. According to the analyst, the pendulum has swung too far in favor of agents over brokers. This means that even in a heavily declining market, the higher contribution of top-performing agents will place more strain on Anywhere Real Estate Inc. (NYSE:HOUS)’s commission splits.
According to Insider Monkey’s Q4 data, 21 hedge funds were bullish on Anywhere Real Estate Inc. (NYSE:HOUS), and Angelo Gordon & Co held the leading position in the company, comprising 9.4 million shares worth $60.5 million.
In addition to Citigroup Inc. (NYSE:C), Exxon Mobil Corporation (NYSE:XOM), and JPMorgan Chase & Co. (NYSE:JPM), Anywhere Real Estate Inc. (NYSE:HOUS) is one of the bargain stocks on the radar of smart investors.
Longleaf Partners Small-Cap Fund made the following comment about Anywhere Real Estate Inc. (NYSE:HOUS) in its Q4 2022 investor letter:
“Anywhere Real Estate Inc. (NYSE:HOUS) – Real Estate brokerage franchisor Anywhere declined this year in the face of broad concerns over the housing market and rising mortgage rates. We were wrong about the severity of the housing market downturn, further compounded at Anywhere by leverage. CEO Ryan Schneider has taken steps within his power to position the company to weather a tough environment. The company now trades at a single-digit multiple of 2023 extremely depressed FCF/share based on 4 million existing home sales and about 2.5x our estimate of long-term FCF/share based on a long-term average number of existing home sales of around 5.5 million units. Anywhere successfully navigated a much more challenging market during the GFC with even higher leverage, so we are confident the company will make it to the other side once again.”
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Disclosure: None. 12 Best Bargain Stocks To Buy in March is originally published on Insider Monkey.
