In this article, we shall discuss the 5 best value stocks to buy now. To read our comprehensive analysis of the global economic outlook in 2022, go directly and see 10 Best Value Stocks to Buy Now.
5. Goldman Sachs Group Inc. (NYSE:GS)
Number of Hedge Fund Holders: 69
PE Ratio (As of September 22): 7.28
Based in New York City, Goldman Sachs (NYSE:GS) is an American multinational investment bank and financial services company which ranks 57th on the Fortune 500 list of largest U.S. corporations by revenue.
On August 27, BMO Capital analyst James Fotheringham lowered the price target on Goldman Sachs (NYSE:GS) to $461 from $475, keeping an Outperform rating on the shares. The analyst contends that although the company delivered higher expected operating and credit costs, it is necessary to consider that the company also reported an impressive, revenue-driven earnings report for Q2 2022. Fotheringham adds that in the longer term, Goldman Sachs (NYSE:GS) is projected to maintain mid-teens RoTCE, given tailwinds originating from the share gains in core IB/GM franchises. These tailwinds are also projected to improve profitability of higher-growth adjacencies and optimize funding.
Here is what GoodHaven Capital Management had to say about Goldman Sachs (NYSE:GS) in their Q2 2022 investor letter:
“Other activity in the period included eliminating our holding in PG&E and adding a few new holdings – the luxury furniture and lifestyle company RH (formerly Restoration Hardware) and The Goldman Sachs Group, Inc. (NYSE:GS). A few important developments changed at PG&E including higher future capex plans and changes in long-term guidance, and so we changed our mind and sold. Purchases were made on a handful of occasions in 2020 and mid-2021 at an approximate average price of $9.20 and fully sold during February 2022 at an approximate average price of $11.42, earning approximately 24%. We have for some time admired what RH’s unique leader Gary Friedman and his team have built at RH and what we think the future holds. After the shares declined more than 30% from the early December 2021 high, we established a position and have increased our holdings more recently. Referring to RH as a furniture company is technically accurate, but a very incomplete description of where the company is headed. Gary has a unique blend of management skills and we look forward to writing about this holding and potentially materially increasing the position opportunistically, cognizant that the coming housing market slowdown will likely negatively impact results at RH as well. We also initiated a position in Goldman Sachs at an inexpensive valuation and are attracted by the potential durability of the company’s ability to generate high returns on equity driven in part by the growth in their existing and new franchises.”
4. General Motors Co. (NYSE:GM)
Number of Hedge Fund Holders: 75
PE Ratio (As of September 22): 7.18
Based in Detroit, Michigan, the General Motors Co. (NYSE:GM) is an American multinational automotive manufacturing company. It is the largest automaker in the U.S. and was the largest in the world for nearly 77 years, until it forfeited its top spot to Toyota in 2008.
General Motors Co. (NYSE:GM) has been greatly aggressive in the expansion of its EV portfolio, considering the company has made multiple announcements of supplier agreements, and an increase in battery productions. With the reinstatement of quarterly dividends, the passing of the Inflation Reduction Act, and the inauguration of a share buyback program of nearly $5 billion, the valuation on General Motors Co. (NYSE:GM) is incredibly underpriced, with shares priced at $37.38, as of September 22.
3. Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holders: 82
PE Ratio (As of September 22) : 5.92
Based in New York, Citigroup Inc. (NYSE:C) is an American multinational investment bank and financial services corporation and is the third largest banking institution in the U.S.
The company’s efficiency ratio increased from 63.37% in Q4 2021 to 70.71% in Q2 2022. The company’s total assets are expected to increase with a CAGR of 2.5% in the next ten years and though the stock is currently priced at $45.58 as of September 22, the stock valuation using the FCFE model shows the stock is worth more than $65 per share.
Here is what Diamond Hill Capital had to say about Citigroup Inc. (NYSE:C) in their Q1 2022 investor letter:
“Shares of Citigroup declined in the quarter as investors became increasingly negative on capital markets activity. The company is also continuing to divest certain consumer banking geographies which may be dilutive to earnings in the near term.”
2. Bank of America Corp. (NYSE:BAC)
Number of Hedge Fund Holders: 99
PE Ratio (As of September 22): 10.65
Headquartered in North Carolina, the Bank of America Corp. (NYSE:BAC) is an American multinational investment bank and financial services holding company. As of the second quarter of 2022, investor interest in Bank of America Corp. (NYSE:BAC) has remained the same, with 99 hedge funds long the stock in both Q1 and Q2 2022. On July 19, RBC Capital analyst Gerard Cassidy lowered the price target on Bank of America Corp. (NYSE:BAC) to $40 from $45, maintaining an Outperform rating on the shares after its Q2 results. According to the analyst, the company’s diversified business model continues to demonstrate its ability to navigate through uncertain times.
Here is what ClearBridge Investments had to say about Bank of America Corp. (NYSE:BAC) in their Q2 2022 investor letter:
“In the second quarter we made a sizable add to our position in Bank of America (NYSE:BAC) as our bank holdings have significant leverage to rising interest rates. The Fed, unfortunately, was late to realize inflation’s magnitude, maintaining for far too long that inflationary pressures were merely transitory. This mistake caused inflation to accelerate, necessitating a larger intervention than if the Fed had moved sooner.”
1. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 104
PE Ratio (As of September 22): 8.92
Based in New York, JPMorgan Chase & Co. (NYSE:JPM) is a commercial and investment banking institution founded by J.P Morgan in 1871. On September 12, Deutsche Bank analyst Matt O’Connor lowered the price target on JPMorgan (NYSE:JPM) to $155 from $174, maintaining a Buy rating on the shares. Banks have generally underperformed in 2022, driven by increasing anxiety around a recession. However, there has been some consolation over the past month, the analyst states in a research note. Although banks are down about 25% currently, and are pricing in a 55% chance of a moderate recession, the implication is that one can expect a good upside to the stock in the longer term, if the U.S. is able to avoid a significant downturn.
Here is what Carillon Tower Advisers had to say about JPMorgan Chase & Co. (NYSE:JPM) in their Q1 2022 investor letter:
“More cyclical sectors, including technology and consumer discretionary, were among the weakest, likely due to rising interest rates and inflation. It was encouraging to see the quarter finish on a strong note with the S&P 500 only about 5% away from its all-time highs. Shares of JPMorgan Chase (NYSE:JPM) detracted from performance due to the company’s increased expense guidance, announced in January.”
You can also take a peek at 10 Best Gun Stocks to Invest In and Billionaire David Abrams’ Top Stock Picks.
