In a time where tech and biotech stocks are all the rage and dominate the news cycle, it might be tempting to overlook ripe opportunities in the value investing universe. Value stocks tend to be solid, mature businesses that offer investors an opportunity to reap out sized gains. This opportunity is made possible through strong fundamentals, which positions various value stocks favorably over the long-run. In this article, I’ll pull back the curtain on seven such stocks. Each of these value stocks could give you a great foundation for creating wealth for this month in April and beyond.
Many investors simply aren’t looking at this list of value stocks. That’s likely because of these companies lower-than-market growth rates. However, this reality also means these overlooked value stocks could represent excellent opportunities over the long-term.
Many of these companies have established brands with strong economic moats and business models. Additionally, these companies tend to offer an attractive blend of profitability and future growth potential. By putting your trust in these companies, you could help to round out your portfolio and position yourself strongly in the future.
These companies were chosen specifically because they are not well-known compared to more blue chip companies. Each is backed by an investment thesis that holds potential.
|MFC||Manulife Financial Corporation||$18.95|
|OMI||Owens & Minor||$15.39|
Belden (NYSE:BDC) provides signal trasmission solutions for a variety of applications. These solutions are used in industrial applications such as in cyber security and enterprise networking. The brand’s core business involves selling connectivity and cable products.
What makes Belden a strong pick is due to the breadth of its revenue and earnings diversification, as well as the fact that it trades an an attractive valuation. Belden has contracts to supply its services to clients in a range of industries, from aerospace to renewable energy. This provides the company a degree of safety, which could be especially important as it’s possible the US will enter into a recession later this year.
The company’s price-to-sales ratio is currently 1.3-times, while sales have continued to climb 7.7% on a quarter over quarter basis. Wall Street also has given BDC stock a price target of $102, thus making it undervalued at current levels.
Greif (NYSE:GEF) provides industrial packaging solutions. The brand has a long history stretching back to 1877 and has operates in a wide range of industries such as chemicals, food, pharmaceuticals and more.
What I like about Greif is that it operates on the tailwinds of circular economic principles, which I feel will become more important in the future. The company is committed to reducing its carbon footprint and economic impact through producing lighter packaging materials, thus allowing it to ride the demand for eco-friendly packaging solutions.
On top of all of this, Greif has a solid track record of financial results. Its earnings per share have grown 25.6% over the last five years, and can currently be bought at a discount on a revenue basis, with its price-sales ratio sitting at a very reasonable 0.6-times.
Manulife Financial Corporation (MFC)
Manulife Financial Corp (NYSE:MFC) is an international financial services group that provides insurance, wealth management, and asset management solutions to clients all over the world, but primarily in Asia.
I chose Manulife because emerging markets can hold a lot of room for growth. Manulife’s focus on the developing economies of Vietnam, Thailand and other southeast Asian countries is noteworthy. Why? Well, the economies of these countries benefit from a younger workforce and rising middle classes. Accordingly, these demographics necessitate higher demand for the financial products that Manulife provides.
The risk of operating in emerging markets should be weighed and carefully explored. However, most investors in the U.S. are under-exposed to emerging market and international stocks. Thus, investing in such stocks may offer a degree of safety and added diversification from market turbulence at home.
Another positive about the stock is that it can be bought at a bargain. Currently trading around $19 per share, this corresponds to a price-earnings ratio of only 7-times. This cheap valuation also provides investors with a competitive dividend yield of 5.5%, supported by a sustainable payout ratio of less than 50%.
Methode Electronics (MEI)
Methode Electronics (NYSE:MEI) is another strong industrial stock that operates in locations around the world. It has engineering, sales, and manufacturing plants in 14 countries.
I chose Methode Electronics as a long-term stability play due to the very safe nature of its balance sheet and operational stability. The company is also relatively small, with a market cap of $1.53 billion. Its current ratio stands at 3.5, while its long-term debt to equity ratio stands at just 0.21.
Ordinarily, if a company is sitting on a ton of cash, it could be a sign that it’s doing a poor job at managing its working capital. However, in this case, its conservative approach could prove to be a positive for investors. If the company also holds a bearish thesis in the near the near future, it may also be employing a “wait and see” approach to if a recession eventuates, before deploying capital in a more certain environment.
Comerica Incorporated (CMA)
Comerica Incorporated (NYSE:CMA) is a U.S. financial services company with headquarters located in Texas. Its offerings differ from Manuife in several ways, such as through the offering of business and personal banking services as well as commercial lending. Its clients are also located mostly in the United States.
I chose Comerica primarily due to its competitive advantage in relationship banking. This type of service involves the bank playing a deeper role in the client’s life and may improve customer loyalty, retention, and foster up and cross-selling opportunities when executed successfully. This form of banking is made possible due to the brand’s strong regional focus in the areas it serves in California, Texas, and Michigan.
The company’s personalized focus on its customers also help insulate its books against economic uncertainty. Although the economy may experience a downturn in the foreseeable future, those headwinds won’t easily shake the strong personal relationships Comerica’s brokers and advisers build with their customers. This provides the company’s customers with an incentive to stay, as well as come back, if their circumstances change.
Another plus about the company is that it has a juicy dividend yield at 6.7% at the time of writing, thanks in part to CMA stock trading near the bottom of its 52-week range.
Owens & Minor (OMI)
Owens & Minor (NYSE:OMI) could fill an investor’s need for exposure to the logistic and supply chain management industries, as it focuses on the distribution of medical as well as surgical supplies in the United States and Europe.
I feel that Owens & Minor will benefit specifically from the growing demand for healthcare services due to the aging population in the United States. An aging population will require additional healthcare products to be shipped between locations. What’s better is that Owens & Minor already has a robust distribution network established, and as a major player in the shipping industry, clients may trust it more over newer entrants to the market to carry products as important as medicine and pharmaceuticals.
The company’s valuation is also set to change dramatically for the better. Although its price-earnings ratio currently stands at a hefty 53-times, on a forward basis, when accounting for future earnings, that drops down to a very manageable 8.13. Thus, it could be a good idea to jump on board the stock soon.
ArcBest Corporation (ARCB)
ArBest Corporation (NASDAQ:ARCB) is a another shipping and logistics company that should be on your radar. Instead of specializing in shipping medical products, ArcBest instead helps e-commerce brandss ship their products to consumers. This market positioning is important as e-commerce is certainly going to be become more important as time moves forward.
What gives ArcBest an edge over its peers and new entrants is that its logistics chain is already established and also has a leg up in research development. It’s currently exploring how to use technologies like artificial intelligence, data analytics, as well as automation to pull ahead of the pack.
Another fact which makes ArcBest worthwhile to look into is that it’s a smaller company, with a market cap of roughly $2 billion, thus giving it plenty of room for future growth. Shares of the company can also be scooped up at a bargain with a price-sales ratio under 5-times.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.