The last several days have been tough ones for the market, and today aside, people haven’t been keen on stocks to buy. The S&P 500 is down more than 6% from its early October high, and appears to be testing the waters of even lower lows. For some big names like Advanced Micro Devices (NASDAQ:AMD) and FedEx (NYSE:FDX), it has been an even more harrowing phase. AMD shares are off 15% and FedEx has lost 12% for the month.
There may even be more downside to go. But, as tempting as it is for traders to wait and see if they can find the exact low point, that’s a dangerous game to play. More often than not the mistake isn’t getting in too early, but getting in too late because a trader didn’t think a low point was the actual low.
To that end, a whole bunch of names have turned into bargain stocks. Here’s a rundown of the top stocks to buy among those names.
Owens Corning (OC)
Admittedly, the construction market hasn’t been red hot of late. Housing starts as well as building permits are leveling off from their peak earlier this year, as interest in new homes wanes each time interest rates edge higher.
There’s more to the construction world than homebuilding though. Nonresidential construction spending, where Owens Corning (NYSE:OC) excels, reached an all-time record in the second quarter, and though the numbers are still preliminary, as of August that big sliver of the construction market continues to grow.
End result: Analysts expect Owens Corning’s top line to improve by 13% this year, driving profits up from last year’s $4.40 to $5.20 this year. Next year’s projected profit is a healthy $6.23 per share, translating into a forward-looking P/E of 8.1.
The passenger vehicle market may be bumping into a headwind stemming from oversaturation. But, the truck and heavy machinery market is still growing in step with an improving economy. That trend puts heavy-engine maker Cummins (NYSE:CMI) right where it wants to be.
A couple of ancillary data nuggets help flesh out the bullish case that CMI is one of the top bargain stocks to buy sooner than later, while it’s priced at only 9.6 times next year’s projected earnings. The first one is, sales of class-8 trucks — the big rigs — are projected to reach a record-breaking 450,000 units this year in North America. The second is, total tonnage of goods shipped by truck reached record-breaking levels in August, and is still trending higher.
Both trends bode well for a key supplier of the engines those trucks need.
U.S. Steel (X)
U.S. Steel (NYSE:X) shares tumbled in early August following the release of its second-fiscal-quarter numbers, and never recovered. Indeed, it continued to drift lower, and the stock is now 26% below its July high.
Cooling steel prices may have had more to do with that weakness than any particular shortcoming from the company. Rebar and hot-rolled steel surged into the early part of 2018, but were (and still are) expected to level off. That was going to make it tougher for U.S. Steel to turn revenue into the kinds of profit margins it had just been producing.
The pessimists may have been a bit overzealous in pricing in their doubts though. The steel market is still strong and reliable … reliable enough to let the company earn an estimated $5.76 this year, and grow that figure to $5.98 next year. That’s not bad for a stock priced around $28.
Capital One Financial (COF)
Capital One Financial (NYSE:COF) does a little bit of everything in consumer lending, though it’s best known for its credit cards.
It’s a business that’s been dodging several bullets from multiple angles, ranging from stepped-up credit card competition to more payment options that circumvent credit card middlemen to rising interest rates. The 10% tumble COF shares have suffered since late August, however, may be rooted in fears that are nothing more than that — fears.
JPMorgan not only reiterated bullishness on the credit card industry based on falling delinquencies and lower net charge-offs, analyst Richard Shane recently commented “Given compressed multiples … we see the potential for positive credit commentary as a near-term catalyst.”
His pick of the litter, so to speak, is Capital One Financial.
Synchrony Financial (SYF)
In that same vein, Synchrony Financial (NYSE:SYF) has also earned a spot in a short list of stocks to buy after losing more than 11% of its value just since late September. In fact, SYF shares are down a whopping 20% since May’s high, and looking to test the waters of new 52-week lows.
Investors may be pricing in worries that aren’t quite justified though. Analysts are calling for revenue growth of 8% this year leading to a per-share profit of $3.43, while next year’s projected sales growth of 7.2% is expected to drive a profit of $4.51 per share. That works out to be a forward-looking P/E ratio of 6.6, which is dirt cheap among stocks to buy by anybody’s standards.
Biotech stocks generally don’t work their way down to valuations that would be considered bargains. Indeed, they’re usually known for their frothy valuations that reflect the premium investors are willing to pay for potential growth.
Every now and then though, a biopharma name will quietly slide into bargain territory while investors aren’t looking. That’s what has happened to Celgene (NASDAQ:CELG), which is down 40% for the past year, and is back within sight of new 52-week lows, pushing its forward-looking P/E to only 7.9.
What gives? Good question. Revenues as well as earnings are both expected to grow at a double-digit pace this year and next year. And, it’s not like those results are at risk. Though its blood cancer treatment Revlimid accounts for an oversized 64% of its sales, there aren’t any legitimate competitive threats on the near-term horizon.
International Game Technology (IGT)
The casino and gaming business just isn’t what it used to be. Even in Macau, which was once pegged as the next Las Vegas, isn’t thriving quite as well as it used to.
It’s a dark cloud that has prompted investors to view International Game Technology (NYSE:IGT) through bearish-colored glasses. In fact, the stock’s off to the tune of 40% just since May’s high, on the heels of a couple of disappointing quarterly earnings reports.
There are limits, however, and at 9.7 times next year’s estimated earnings, IGT stock may already be at them if not beyond them. Underscoring that bullish argument is how despite a couple of earnings shortcomings, the analyst community still holds a price target of $28.29. That’s nearly double the current price of $16.85, and makes it among the best stocks to buy.
Lam Research (LRCX)
While the past several days may have been generally rough for the overall market, they’ve been brutal on technology stocks. Lam Research (NASDAQ:LRCX) hasn’t been an exception to that paradigm. But, maybe it should have been.
Lam Research isn’t a technology stock in the conventional sense. It doesn’t make the components that consumers find in their devices. Rather, it makes the tools and equipment that other technology outfits need to make that hardware. It’s a subtle but important difference. Though its customers tend to see wide swings that ebb and flow with breakthroughs and changes in the economy, the need for new, cutting-edge fabrication equipment isn’t nearly is subject to change.
In that light, the projected P/E of 8.6 looks quite compelling among stocks to buy.
Between all the deal-making Comcast (NASDAQ:CMCSA), Walt Disney (NYSE:DIS) and Twenty-First Century Fox (NASDAQ:FOXA) have done of late, it would be easy to conclude there are no networks and channels left standing on their own. But there are. CBS (NYSE:CBS) is still around, doing its own thing … at least for the time being. The buzz is that it’s also shopping around for a buyer.
A potential buyout isn’t a bad reason to own a stock, although it’s not the only reason an investor might want to step into CBS. Rather, CBS stock may well be worth a shot because priced at only 9.5 times next year’s expected earnings, the stock’s undervalued with or without a buyout.
Jeld-Wen Holding (JELD)
Last but not least, add Jeld-Wen Holding (NYSE:JELD) to your list of bargain stock to buy sooner rather than later.
It’s not a household name, though it’s entirely possible the home or apartment you live in was built with a Jeld-Wen product. The company is one of the world’s largest manufacturers of doors and windows.
That has been viewed as something of a liability of late, with the home-construction market starting to stagnate; the company doesn’t exactly cater to the public building market. And, the headwind was made even worse on Monday following a contracted earnings outlook for the third quarter and the CFO’s resignation. Tuesday’s 20% tumble on top of the selloff suffered all year long, however, is arguably overkill and a capitulation.
The stock’s now trading at a projected P/E of 7.3, which is cheap among stocks to buy even if the company doesn’t quite reach its 2019 profit target.
As of this writing, James Brumley held a long position in Cummins. You can follow him on Twitter, at @jbrumley.