One of the main concerns for investors right now is whether to fight the trend or not while the ongoing bear market continues. Rallies like the one on June 21 prove that even in a bear market, stocks can still trend higher. Buying cheap stocks that are still high quality and holding them for the long-term is an investment strategy worth considering.
By doing that, you’re fighting the overall stock market downtrend, but you avoid relying too heavily on technical analysis. In a selloff, expensive stocks do not become buys — they just get less expensive.
The following three stocks are bargains now, and they have solid fundamentals. They can provide good risk-adjusted returns over time, ignoring the current stock market’s intense fluctuations. Let’s have a closer look at these stocks to buy and see what makes them worthwhile.
|Prospect Capital Corporation
StoneX Group (SNEX)
StoneX Group (NASDAQ:SNEX) is a financial services network that connects investors and companies to worldwide markets, including foreign securities and commodities.
StoneX Group stock has defied the bear stock market with gains of 22% in 2022. It trades at a trailing price-to-earnings ratio of 10.4 and has a forward price-to-sales ratio of 0.03 and a trailing price-to-cash flow of 0.41.
The company witnessed a boom in its revenue in 2019 and in 2020 of 19.09% and 64.57% respectively. While sales growth dipped 21.44% in 2021, over the past three consecutive quarters it is very strong again with double-digit growth. It is a highly profitable company that generates tons of free cash flow. The 1-year target estimate of $87 signals potential gains of nearly 17%.
Genworth Financial (GNW)
Genworth Financial (NYSE:GNW) is an insurance company with its main products including long-term care insurance and life insurance. Shares of Genworth Financial trade at nearly $3.62, but what is so special about this penny stock? The answer is in the valuation.
The shares have losses of nearly 11% in 2022 and trade at a P/E ratio of 2.2. The stock is very cheap now, as the forward enterprise value-to-sales ratio is 0.4, the forward P/S ratio is 0.22 and the trailing price-to-book ratio is only 0.12.
The business is stable. as sales growth does not fluctuate much. That’s not a bad thing, though. This insurance company has found an edge as its profitability has gained traction in the past three years. In 2019, 2020 and 2021 net income growth was 399.1%, 100% and 32.08% respectively.
Its free cash flow has fluctuated a lot, but it has remained positive, and the firm is doing exceptionally well at what every business should do — accumulate positive retained earnings over time.
Prospect Capital Corporation (PSEC)
Prospect Capital Corporation (NASDAQ:PSEC) is a business development company. It makes a variety of investments, including debt and equities.
Prospect Capital Corporation stock has losses of 15% in 2022. This has created an attractive price level to consider buying PSEC stock. The stock has a very low P/E ratio of 3.4 and offers a forward dividend yield of 10.4%. The trailing P/B of 0.64 is indicative of an undervalued stock.
Except in 2020, this business development firm has a history of strong profits in recent years. In 2021 net income surged 6,040.63% to $963.81 million. The company has zero capital expenditures; therefore it generates positive and consistent free cash flow as net operating cash flow is robust.
On the date of publication, Stavros Georgiadis, CFA did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.