As we head into August, there remain a number of stocks that continue to be cheap when compared to their peers and the broader market. While the S&P 500 index continues to hit new record highs, the current rally has not been a broad-based one. Many stocks continue to lag the market and have even fallen during July. These present attractive buying opportunities for savvy investors who know how to spot a deal.
Many great companies continue to attract positive analyst ratings and high price targets even as their share price languishes. And a lot of beaten-down stocks only need a spark to ignite their share prices and send them soaring higher.
In this article, we look at seven cheap stocks to buy for August as we enter the dog days of summer:
- General Electric (NYSE:GE)
- Molson Coors (NYSE:TAP)
- American Airlines (NASDAQ:AAL)
- NortonLifeLock (NASDAQ:NLOK)
- Sirius XM Holdings (NASDAQ:SIRI)
- Hanesbrands (NYSE:HBI)
- Ford (NYSE:F)
Cheap Stocks to Buy: General Electric (GE)
Lately, several Wall Street firms have been upgrading their ratings on Boston-based industrial giant General Electric. Investment bank Goldman Sachs recently named the stock one of its “top ideas,” and Citibank reiterated its “buy” rating on GE stock. The optimism comes from expectations that General Electric’s various business units, which includes aviation, renewable energy and healthcare, will perform strongly as the U.S. economy gathers momentum coming out of the global pandemic.
Options markets were abuzz earlier in July when one trader placed a $5 million bet on GE stock after United Airlines (NASDAQ:UAL) announced that it will purchase 200 jets from Boeing (NYSE:BA), which will bolster the aircraft engines that GE’s aviation division manufactures. The options trader has wagered millions that GE’s share price will be above $15 by January 2022, which would be about 15% higher than its current price. Clearly, Wall Street views GE’s shares as undervalued and cheap right now.
We’ll see if the company’s earnings can spark a rally in the stock.
Molson Coors (TAP)
With restaurants, bars, stadiums and concert venues reopening this summer, alcohol sales can be expected to spike along with other types of beverages. We’ve already seen big earnings beats from soft drink makers Coca-Cola (NYSE:KO) and PepsiCo (NASDAQ:PEP) due to surging sales as the economy reopens. The same can reasonably be expected from Molson Coors, the Chicago-based company behind popular beers such as “Coors Light” and “Miller Genuine Draft,” to name only a couple of its many alcoholic beverages.
Indeed, Molson Coors is feeling bullish enough about the second half of this year that the company recently reinstated its quarterly dividend of 34 cents per share, which it had suspended during the pandemic. And the company also reaffirmed its financial outlook for this year, saying again that it expects to achieve a net sales revenue increase in the mid-single digit range compared to 2020. TAP stock remains affordable at $50 a share, and it looks to present a buying opportunity right now having declined 9% since the end of June.
Buy the dip!
Cheap Stocks to Buy: American Airlines (AAL)
Air travel is returning to pre-pandemic levels, and few airline stocks are more affordable or present as much upside potential right now as Fort Worth, Texas-based American Airlines. At about $21 per share, AAL stock looks like a bargain. While the stock has run 44% higher so far this year, it remains 30% below the level it was trading at before the pandemic.
Many analysts expect the company’s share price to regain the $30 it was at pre-pandemic. Goldman Sachs Chief U.S. Equity Strategist David Kostin recently said he expects a near-term rally in American Airlines stock.
The bull case for the stock was reinforced by the company’s just released second-quarter earnings. American Airlines announced quarterly net income of $19 million, ending five consecutive quarters of losses. Revenue for the three months ended June 30 totaled $7.48 billion, up from only $1.6 billion a year earlier. Earnings-per-share amounted to a loss of $1.69, which was much better than the loss of $2.41 per share forecast by analysts. The carrier said it will pay down $15 billion in debt by 2025 as it ramps up both its domestic and international flights schedules.
The shares of cybersecurity firm NortonLifeLock have fallen 5% in the past month, making them an attractive buy at just $25 a share. The stock is up 22% year-to-date and had been rallying into July following several high profile cyberattacks on the U.S. that put cybersecurity on the front burner with the media, politicians and corporate leaders. NortonLifeLock has also benefitted over the past year from the pandemic as demand for its cybersecurity software rose as people worked and went to school from home.
NortonLifeLok’s second-quarter earnings reinforced that the company is performing strongly this year. The company’s Q2 revenue came in at $626 million, up 3% from $608 million in the same period of 2020. A decline in operating expenses helped NortonLifeLok’s operating income more than double to $230 million from $109 million in the second quarter of 2020. Second quarter EPS was 28 cents, up an impressive 367% from 6 cents a year ago.
Clearly the company is performing well as we emerge from the pandemic.
Cheap Stocks to Buy: Sirius XM Holdings (SIRI)
Satellite radio provider Sirius XM Holdings’ stock continues to underperform and look undervalued at its current price of just $6.40 a share. Year-to-date, SIRI stock is up only 8%. Yet the company and its stock continues to have a number of notable fans, including famed investor Warren Buffett, whose Berkshire Hathaway holding company currently owns more than 40 million shares. It remains a bit of a mystery why the stock of Sirius XM, which holds a de facto monopoly position in the satellite radio space, continues to lag the market.
There is hope that SIRI stock will finally begin moving now that it has completed its acquisition of subscription-based streaming service Pandora and is adding new listeners. The company recently announced that it will begin issuing a quarterly cash dividend of 2 cents per share beginning on Aug. 30, and it continues to buyback its own stock. On July 19, Sirius XM announced an additional $2 billion of common stock repurchases. Since 2013, the company has spent $18 billion buying back its own stock. Prior to the pandemic, Sirius XM Holdings reported 11 consecutive years of positive returns.
While it’s best known for making underwear and white t-shirts, Hanesbrands is a more diversified company today. The Winston-Salem, North Carolina-based clothing maker owns brands ranging from Champion to Wonderbra and employs more than 65,000 people around the world. HBI stock has had a good run so far in 2021, up 26% year-to-date, it still remains relatively cheap at just $18.26 a share.
And analysts seem to feel that HBI stock has more room to run. The median price target on the shares is $23, suggesting a further 25% increase from its current level. The high price on the stock is $27. Analysts feel confident that Hanesbrands will benefit as consumers emerge from Covid-19 hibernation and begin shopping in earnest, as well as updating their wardrobes as they return to the office. In addition to its affordable share price, Hanesbrands also pays a hefty dividend that yields 3.3%, making it a solid income stock to have in a portfolio.
Cheap Stocks to Buy: Ford (F)
It has rallied 61% this year, but shares of Detroit automaker Ford Motor Company have pulled back 7% in the past month, presenting an opportunity for investors to buy the dip in F stock. And at roughly $14 a share, Ford’s stock remains very affordable. Especially when compared to the share prices of rivals General Motors (NYSE:GM) and Tesla (NASDAQ:TSLA). Ford’s vehicle production, and its share price, have been hurt in recent weeks by the ongoing semiconductor shortage. The company has been forced to idle production at several plants due to the chip shortage.
However, analysts see the semiconductor issue as a short-term problem and remain bullish on Ford’s long-term prospects, especially as it accelerates its transition to electric vehicles. The company has invested $11.5 billion into the development of its Mustang Mach-E electric crossover SUV, F-150 Lightning electric pick-up truck and E-Transit electric van. More electric vehicles are in development at the automaker and analysts remain bullish. The median price target on F stock is $16, implying 14% upside from here. The high estimate on the stock is $18.
On the date of publication, Joel Baglole held a long position in C. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.