According to Morningstar’s The Morning Filter with Dave Sekera and Susan Dziubinski, investors may want to look at five small-cap names trading at big discounts. Each company offers a different angle, from consumer brands to materials, and all are rated 4 or 5 stars by Morningstar.
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Mattel
First, Mattel (MAT) is on the list. The toy maker trades at $18, about a 27% discount to fair value, with strong brand power and licensing deals behind it. Sales delays earlier this year are expected to shift to the holiday season, and the stock trades at around 11 times guidance, which Morningstar sees as attractive. On TipRanks, Mattel scores a Moderate Buy consensus rating.
Scotts Miracle-Gro
Next is Scotts Miracle-Gro (SMG), a lawn and garden company. It trades at $62, about a 30% discount, and offers a 4.3% yield. Recent weakness came after cautious comments on competition, but fundamentals remain steady, and margins are improving. On TipRanks, SMG stock scores a Moderate Buy consensus rating.
Sealed Air
The third pick is Sealed Air (SEE), a packaging firm with embedded equipment that makes switching costly for customers. SEE shares trade at about $32, a 35% discount, and yield about 2.5%. Morningstar believes demand is stabilizing after pandemic-driven swings. On TipRanks, SEE scores a Moderate Buy consensus rating.
Bath & Body Works
Bath & Body Works (BBWI) is also featured. This retailer trades at about $31, nearly a 50% discount, and yields 2.7%. The stock has lagged this year, but its affordable, gift-friendly products and holiday demand could help. Morningstar suggests waiting for the upcoming earnings report before jumping in. Nevertheless, on TipRanks, BBWI shares score a Strong Buy consensus rating.
Albemarle
Finally, Albemarle (ALB) is a more speculative play. Shares trade at about $81, more than a 50% discount, and offer a 2% yield. Morningstar expects lithium demand for electric vehicles and storage to rise, even as prices stay weak for now. On TipRanks, ALB shares score a Hold consensus rating, reflecting the stock’s speculative nature.
For those willing to take a long-term view, these five names could offer value if conditions improve.