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
Globe Life (GL) – This insurance company offers life and supplemental health insurance products to individuals and families. It has a Strong Buy analyst consensus rating and an average price target of $167.88, implying a 25.9% upside potential from the current levels. The company’s P/E of 9.46x reflects a 24% discount to the Financial sector’s median of 12.44.
GL stock was up 2% today. Last week, Keefe Bruyette raised its price target on Globe Life to $162 from $160 with a Buy rating. The analyst noted that the main short-term risk is a lack of new growth drivers.
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 $56.74 implies a 26.67% upside potential from the current levels. YUMC stock has a Strong Buy consensus rating. Trading at a P/E of 18.18x, the company is valued 4.3% below the Consumer Cyclical sector’s median multiple of 19.
YUMC stock gained about 2% on Tuesday. The company reported its strong third-quarter results today. Revenue rose 4% year-over-year to $3.2 billion with EPS of $0.76, beating estimates. Also, operating profit climbed 8% to $400 million, driven by same-store sales growth and improved margins.
Strategy (MSTR) – This business intelligence and analytics company is known for its large Bitcoin holdings and enterprise data software. It has a Strong Buy analyst consensus rating and an average price target of $505.08, implying a 104.49% upside potential from the current levels. With a P/E ratio of 12.5x, the stock is priced at a 59.5% discount to the Technology sector’s median of 30.86.
Earlier today, Clear Street cut its price target on MSTR stock to $443 from $537 but kept a Buy rating. The firm still believes in bitcoin’s long-term growth as a store of value, but lowered its price forecast to $125,000 from $135,000, leading to a revised target for Strategy.
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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