But it’s not impossible.
In my mind, the best stocks to buy tend to be those that are the cheapest at any given moment in time. However, as a longtime value investor, I am all too aware that many cheap stocks go lower before eventually turning around and proceeding to march toward fair and full value.
When asked about what stocks would make good “buy” recommendations, I naturally thought about those that traded well below book value and have solid fundamentals — as measured by the Piotroski F-score. Combined with a simple momentum measure, that should give us a list of stocks that are cheap, and that are seeing strong buying (and thus finally might have bottomed).
You can check out more in the video above, or read on to get a look at each of the picks:
Best Stocks to Buy Now – Preferred Apartment Communities (APTS)
Preferred Apartment Communities (APTS) owns and operates multifamily housing communities. It also makes loans to developers of apartment communities, and many of them include a purchase option. Right now, APTS has six communities with more than 1,900 units, as well as 12 loans to developers, four bridge loans to finance pre-development costs and one mezzanine loan for a retail development project.
All of the loans related to multifamily development have a purchase option, so Preferred Apartments has the right to buy the development and add the units to their portfolio.
APTS stock is trading at just 79% of book value and yields a healthy 7.1% at the current price. APTS’s F-score is 6 (out of a potential 9), which indicates the fundamentals and financial condition of the company are solid and improving year-over-year.
Best Stocks to Buy Now – Pacific Drilling Company (PACD)
Pacific Drilling Company (PACD) is a an offshore drilling contractor specializing in ultra-deepwater drilling. PACD currently has six drill ships operating in the Gulf of Mexico, Brazil, Mexico and Nigeria. Two new drill ships are currently under construction. As the new drill ships come on line this year and next, it should boost profitability substantially, and analysts expect PACD to post huge year over year increases starting in 2015.
Pacific Drilling has grown revenues for five quarters in a row and is generating record high levels of cash flow and EBITDA so far this year.
PACD stock currently is trading at just 93% of book value, and the company earns an F-score of 7. Investors have started to notice this undervalued company and the share s have been outperforming the overall market lately.
Best Stocks to Buy Now – Kansas City Life (KCLI)
Kansas City Life (KCLI) is a sleepy little stock that makes our list of best stocks to buy right now. KCLI sells basic life insurance and annuity products in 348 states and the District of Columbia and has an extremely conservative reputation.
Insiders own a pretty big chunk of Kansas City Life, so they are less likely to take silly risks with shareholders money and destroy capital.
KCLI is trading at just 70% of book value and the fundamentals and financial earn the company an F-score of 6. The company has a long history of paying dividends and the shares currently yield 2.4%. KCLI stock has caught the attention of investors and has been moving steadily higher over the past month.
As of this writing, Tim Melvin did not hold a position in any of the aforementioned securities.