Here are seven top value stocks to buy today.
The S&P 500 has struggled in 2022 amid macroeconomic uncertainty. Persistently high inflation, rising interest rates and concerns about a potential U.S. recession have most high-risk stocks trading well off 2021 highs, but broad market weakness has also dropped the share prices of many high-quality value stocks as well. Fortunately for investors, that weakness has also created some compelling value opportunities. If the Federal Reserve can avoid a hard landing for the economy, these value investing opportunities likely won’t last for long. Here are seven undervalued stocks to buy with forward earnings multiples under 15, according to CFRA.
Exxon Mobil Corp. (ticker: XOM)
Exxon Mobil is the largest publicly traded U.S. integrated oil company. The oil and gas industry has been one of the few market bright spots in 2022. Exxon shares are actually up 76.1% this year through Dec. 7, the best performance of any stock on this list. Fortunately for value investors, rising oil prices have also boosted Exxon’s earnings, and its forward earnings multiple remains at just 9.7. Analyst Stewart Glickman says Exxon will continue to benefit from developing its major assets in the Permian Basin and offshore in Africa. CFRA has a “buy” rating and $127 price target for XOM stock, which closed at $103.65 on Dec. 7.
Bank of America Corp. (BAC)
Bank of America is one of the largest U.S. investment banks and wealth management services providers. Rising interest rates are typically great news for banks’ net interest margins, but Bank of America shares are down 24.7% year to date on concerns about loan growth. Analyst Kenneth Leon says loan growth remains a wild card in a shaky economy. However, Bank of America is Leon’s top stock pick among large-cap U.S. banks, and he says its rate-sensitive portfolio is well positioned for higher interest rates in 2023. CFRA has a “buy” rating and $40 price target for BAC stock, which closed at $32.74 on Dec. 7.
Pfizer Inc. (PFE)
Pfizer is one of the largest global pharmaceutical companies. In the past two years, Pfizer has gotten a lot of headlines and sales from its COVID-19 vaccine and booster shots, which it jointly developed with partner BioNTech SE (BNTX). Glickman says Pfizer has about $17 billion in revenue at risk from loss of drug exclusivity from 2025 to 2030. However, he says the company has a strong pipeline of 19 drug candidates with the potential to generate $20 billion in revenues by the end of the decade. CFRA has a “strong buy” rating and $62 price target for PFE stock, which closed at $50.24 on Dec. 7.
Merck & Co. Inc. (MRK)
Merck is another one of the world’s leading biopharmaceutical companies. Merck shares have demonstrated their defensive nature this year, gaining 47.3% year to date. Glickman says Merck made the right call by spinning off Organon & Co. (OGN), its older, slower-growth business. He says the remaining business generates impressive revenue growth and is more focused on key products. In the near term, Glickman says oral COVID-19 treatment Molnupiravir will be a growth catalyst, and Merck’s acquisition of Acceleron Pharma will increase its exposure to the high-growth cardiovascular disease treatment market. CFRA has a “strong buy” rating and $116 price target for MRK stock, which closed at $110.09 on Dec. 7.
Broadcom Inc. (AVGO)
Broadcom is a diversified global semiconductor device developer and supplier. Tech stocks have been hit hard in 2022, but Broadcom isn’t the typical high-growth, low-profit tech stock. Broadcom generated more than $3 billion in net income in the most recent quarter, trades at just 13.6 times forward earnings and pays a 3.1% dividend. In May, Broadcom announced a $61 billion buyout of VMware Inc. (VMW). Analyst Angelo Zino says the VMware deal adds high-visibility, high-margin software revenue and helps diversify Broadcom’s business away from the semiconductor industry. CFRA has a “buy” rating and $580 price target for AVGO stock, which closed at $518.50 on Dec. 7.
Cisco Systems Inc. (CSCO)
Cisco Systems specializes in networking, security, collaboration, cloud computing and other technologies. Analyst Keith Snyder says Cisco faces near-term headwinds from component shortages, but the WiFi 6 upgrade cycle and global 5G core deployments are long-term demand drivers. Snyder says supply chain disruptions should subside in fiscal 2023, and Cisco will continue to benefit from secular growth in bandwidth consumption and data center solutions. Cisco is an excellent play on the massive cloud networking market, and Snyder says the company’s strong balance sheet will facilitate acquisition opportunities. CFRA has a “strong buy” rating and $60 price target for CSCO stock, which closed at $48.18 on Dec. 7.
Comcast Corp. (CMCSA)
Comcast is a media conglomerate with a diversified portfolio of cable and broadcast television assets, including NBCUniversal, the Peacock streaming service and Universal Films. For value investors looking to buy the dip in 2022, Comcast has taken a particularly hard hit. Comcast shares are down 29.4% year to date, making Comcast the worst-performing stock on this list. Snyder says Comcast’s TV, film and theme park businesses are benefiting from pent-up demand, and the company should sustain high-single-digit returns on invested capital, or ROIC, in coming years. CFRA has a “buy” rating and $50 price target for CMCSA stock, which closed at $34.62 on Dec. 7.
7 undervalued stocks to buy now:
— Exxon Mobil Corp. (XOM)
— Bank of America Corp. (BAC)
— Pfizer Inc. (PFE)
— Merck & Co. Inc. (MRK)
— Broadcom Inc. (AVGO)
— Cisco Systems Inc. (CSCO)
— Comcast Corp. (CMCSA)
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7 Undervalued Stocks to Buy Now originally appeared on usnews.com
Update 12/08/22: This story was published at an earlier date and has been updated with new information.
