In this article, we will take a look at the 5 dirt cheap stocks to buy. To see more such companies, go directly to 10 Dirt Cheap Stocks To Buy.
5. Teva Pharmaceutical Industries Limited (NYSE:TEVA)
Price as of January 12: $11.37
Forward P/E: 4.28
Number of Hedge Fund Holders: 27
Teva Pharmaceutical is an Israel-based pharma company that offers an attractive entry point for long-term investors, according to several market analysts. On an adjusted basis, Teva Pharmaceutical Industries Limited (NYSE:TEVA) has a forward PE multiple of 3.63x, compared to the industry average of 19. Teva Pharmaceutical Industries Limited (NYSE:TEVA) is known for its generics and drugs that address central nervous system diseases such as multiple sclerosis, migraine, and neurodegenerative disorders.
Earlier this month, Teva Pharmaceutical Industries Limited (NYSE:TEVA) said that it entered settlement agreements with 48 states to resolve claims the pharma company contributed to the opioid epidemic. According to the terms of the settlement, Teva Pharmaceutical Industries Limited (NYSE:TEVA) will pay about $4.35 billion in total.
As of the end of the September quarter, 27 hedge funds tracked by Insider Monkey had stakes in Teva. The total value of these stakes was $573 million. The biggest stakeholder of Teva Pharmaceutical Industries Limited (NYSE:TEVA) was the famous value investor David Abrams’ Abrams Capital Management, with a $193 million stake.
4. Orange S.A. (NSYE:ORAN)
Price as of January 12: $10.79
P/E Ratio: 6.58
Number of Hedge Fund Holders: 5
Orange SA is a French telecom company which has operations in major European countries, Middle East and Africa. Despite its cheap price, Orange S.A. (NSYE:ORAN) is a solid dividend payer and has a dividend yield of about 10% as of January 12. Orange’s business took a hit in 2022 amid macroeconomic situation and rising competition. But Orange S.A. (NSYE:ORAN) is taking several measures to solve this problem. For example, to offset competition in Spain, Orange S.A. (NSYE:ORAN) decided to combine its operations with MásMóvil in a deal worth €18.6 billion.
In the third quarter, Orange S.A. (NSYE:ORAN)’s revenue gained about 3%. However, Orange S.A. (NSYE:ORAN)’s management was quite frank and said that it was facing “an exceptional economic context” which requires Orange S.A. (NSYE:ORAN) to make “appropriate choices” in the coming months. Orange will share its plan on February 16.
3. Fisker Inc. (NYSE:FSR)
Price as of January 12: $8.05
P/E Ratio: N/A
Number of Hedge Fund Holders: 15
Fisker is an American EV company that has some promising growth potential. Fisker Inc. (NYSE:FSR) is known for its Fisker Ocean electric SUV. The SUV’s base model provides 250 miles of range for less than $37,500. In 2023, Fisker Inc. (NYSE:FSR) plans to produce 42,400 units. Fisker Inc. (NYSE:FSR) also plans to launch another electric vehicle in 2024. This vehicle is named Pear and its basic model will start at $30,000.
In November, Evercore ISI started covering Fisker at an Outperform rating and a $15 price target.
Evercore’s team said that Fisker’s business model is differentiated from its rivals like Rivian (RIVN) and Lucid (LCID) and this advantage could help Fisker Inc. (NYSE:FSR) get solid market share.
2. Lumen Technologies, Inc. (NYSE:LUMN)
Price as of January 12: $6.04
P/E Ratio: 3.02
Number of Hedge Fund Holders: 34
Lumen is one of the best dirt cheap stocks to buy now. Lumen Technologies, Inc. (NYSE:LUMN) provides data communication, VoIP, IP, fiber infrastructure and related services. The stock was hammered after Lumen Technologies, Inc. (NYSE:LUMN) announced in November that it was eliminating its dividend and allocating resources for share buyback programs instead. Lumen Technologies, Inc. (NYSE:LUMN) has a $1.5 billion share buyback program, with the flexibility of deploying it within a two-year window. The stock has a PE ratio of 3 as of January 12. While dividend termination was a bad news, Lumen bulls believe that the company is doing what was necessary. The stock could be profitable for long-term investors. Lumen Technologies, Inc. (NYSE:LUMN)’s management is also planning to divest non-core and low-growth assets to deleverage Lumen Technologies, Inc. (NYSE:LUMN)’s balance sheet. These measures can show results in the future.
As of the end of the third quarter, 34 hedge funds tracked by Insider Monkey reported having stakes in Lumen Technologies, Inc. (NYSE:LUMN), compared to 42 funds in the previous quarter.
Here is what Longleaf Partners specifically said about Lumen Technologies, Inc. (NYSE:LUMN) in its Q3 2022 investor letter:
“Lumen Technologies, Inc. (NYSE:LUMN) – Global fiber company Lumen was the top detractor in the quarter. In September, the company announced a new CEO, Kate Johnson, would take over for Jeff Storey. Johnson has a strong track record of delivering organic revenue growth, the primary area where Lumen has struggled. Johnson held previous roles at GE and Microsoft, where she most recently served as head of Microsoft US and doubled her division’s revenue in only four years. Multiple checks through our network vouch for her and suggest this leadership change is a positive upgrade that will bring the discipline and focus on sales that Lumen has been missing. The market reacted negatively with concern over the potential for another dividend cut or strategy change. We are confident the stock price reaction is highly overblown versus any impact that a potential dividend cut would have on value per share. The stock now trades at 4.5x EBITDA, and we believe the best value accretive capital allocation move today is share repurchase. Shortly after quarter end, Lumen closed on the sale of part of its consumer business to Apollo, further improving its balance sheet and business mix.”
1. Transocean Ltd. (NYSE:RIG)
Price as of January 12: $5.45
P/E Ratio: N/A
Number of Hedge Fund Holders: 36
Over the past six months Transocean shares have gained more than 100% in value, surpassing peers Valaris (NYSE:VAL), Noble Corp. (NYSE:NE), Seadrill (NYSE:SDRL) and Diamond Offshore Drilling (DO). However, the stock still looks dirt cheap and shows potential to gain in the near term as investors gain more confidence in Transocean Ltd. (NYSE:RIG)’s ability to fix its liquidity issues. Recently, Transocean Ltd. (NYSE:RIG) announced contract awards or extensions for five of its drilling rigs. Together, the fixtures represent approximately $488 million of firm backlog. In November, Transocean Ltd. (NYSE:RIG) said it expects its adjusted contract drilling revenues to be between $2.9 billion and $3 billion.
You can also take a peek at Top Stocks in Each Sector and Dow 30 Stocks List 2022.
