An essential part of becoming a very profitable investor is finding undervalued stocks to buy. Then, once the market corrects, those particular stocks go up in price relative to their true worth. It leaves investors with a great payout and increased dividend potential due to being able to purchase more shares with less capital.
There are a couple of metrics and company highlights to find bargain stocks. Price-to-earnings (P/E) is one of the most popular ratios. Typically, a low P/E ratio is 20 or less, but this ratio depends on the industry. Also, shareholder equity will tell you what the company would be worth if it was liquidated and all debts were paid off. The last significant piece to pay attention to is simple. Has the company grown steadily over the years regarding net income and revenue? The company may be experiencing a rough patch if the share price falls. But, if there is solid growth in the past, that is a good indicator for the future.
Here are three companies with undervalued stocks to buy.
General Motors (GM)
General Motors (NYSE:GM) is an auto manufacturer with legacy brands such as Chevrolet, GMC, and Buick. GM begun to ramp up its Electric Vehicle (EV) production. In April, they overtook Ford (NYSE:F) in total EV sales with over 20,000 being sold in the first quarter of 2023. Those numbers ranked it as the second largest American manufacturer of EVs only behind Tesla (NASDAQ:TSLA).
Additionally, Morgan Stanley analysts have upgraded General Motors to a buy, and it’s expected to outperform other companies within its industry. GM currently has a one-year price target that predicts a possible increase in the share price of nearly 50%.
On April 25, the company released its first-quarter earnings for 2023. They reported revenue growth of 11% and EPS of $1.69, which is up 25% compared to the previous year. With the company’s share price being cut in half since a near all-time high back at the beginning of 2022. GM has been massively oversold and has room to grow following its continued positive EV news and EPS growth.
Jackson Financial (JXN)
Jackson Financial (NYSE:JXN) is a financial holdings company that supplies a wide range of retirement products, such as annuities and life insurance policies. In February, Jackson Financial increased its quarterly dividend to 62 cents, a 13% increase compared to the previous year.
JXN released its full-year earnings report for 2022 showing revenue growth of over 57% compared to the full-year 2021, and an EPS that nearly doubled.
The company’s IPO date was mid-2021, and its share price reached an all-time high near $50 back in the middle of February. Since then the stock has fallen by over 25%, partially due to the disappointing fourth-quarter earnings results, but the company has seen very positive earnings year-over-year.
Qualcomm (QCOM)
Qualcomm (NASDAQ:QCOM) is a global technology company that focuses on the wireless industry. They have seen a decrease in share price since its all-time high at the beginning of 2022. Their recent earnings were lackluster, with a decrease in revenue of 17% and an EPS that dropped by over 40%. They have also seen a decline in sales of some of their most popular products.
QCOM really shined during Covid-19 pandemic. When they, along with other similar companies, saw a significant increase in sales. Qualcomm is still an industry leader and has year-over-year net income growth. This slump that their stock is in is likely to pass.
On the date of publication, Noah Bolton 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.
