Value stocks offer stability for investors by focusing on companies that seem underpriced compared to their actual worth. This approach involves looking for stocks with strong fundamentals and growth potential. By investing in these stocks, investors can achieve significant returns once the market recognizes their true value.
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One way to identify value stocks is by comparing a company’s price-to-earnings (P/E) ratio with industry averages or its historical P/E ratios. This ratio compares a company’s stock price to its earnings per share. It must be noted that a lower P/E ratio may indicate that the stock is undervalued. Along with this, we have zeroed in on stocks that have received “Strong Buy” ratings from Wall Street analysts.
Here Are This Week’s Stocks
Gilead Sciences (GILD) – This biopharmaceutical company develops therapies for viral diseases, cancer, and other serious illnesses. It has a Strong Buy analyst consensus rating and an average price target of $125.77, implying an 11.51% upside potential from the current levels. The company’s P/E of 22.42x reflects a 15.4% discount to the Healthcare sector’s median of 26.50.
In major updates, the company has recently broken ground on a new 180,000 sq. ft. manufacturing hub in Foster City, California, as part of its $32 billion U.S. investment plan. Also, GILD and Arcus Biosciences are advancing a Phase 2 ‘VELOCITY-Lung’ trial to test novel therapies in metastatic and resectable NSCLC patients.
Yum China Holdings (YUMC) – Yum China is a fast-food restaurant company that operates popular brands such as KFC, Pizza Hut, and Taco Bell. Its average price target of $56.46 implies a 27.12% upside potential from the current levels. YUMC stock has a Strong Buy consensus rating. Trading at a P/E of 18.04x, the company is valued 12.2% below the Consumer Cyclical sector’s median multiple of 20.55.
The company disclosed plans to buy back an additional $270 million of its stock starting September 3, adding to its aggressive 2025 repurchase strategy. This brings total planned and completed buybacks to over $1.1 billion for the year.
ConocoPhillips (COP) – This global exploration and production company focuses on crude oil, natural gas, and natural gas liquids. It has a Strong Buy analyst consensus rating and an average price target of $115.47, implying a 21.84% upside potential from the current levels. With a P/E ratio of 13.28x, the stock is priced at a 7.1% discount to the Energy sector’s median of 14.29.
In recent developments, the company is reportedly laying off 20% to 25% of its global workforce to cut costs and improve its margins. COP is set to hold a town hall meeting on Thursday morning to discuss the changes.
What Is TipRanks’ Smart Value Newsletter?
TipRanks’ Smart Value Newsletter helps investors identify high-potential value stocks with strong fundamentals and long-term growth potential, based on TipRanks’ data and analysis. The newsletter, published weekly, includes macroeconomic, market-wide, and company-specific analysis to help investors understand the trends that affect value investing.
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