Although the Covid-19 pandemic naturally sparked concerns about social unrest and economic instability, the equities market overall has been incredibly resilient, thus seemingly negating the concept of bargain stocks to buy. If you wanted to get your discount, you had to sign up during the spring doldrums of 2020.
To be sure, gargantuan upside opportunities that extreme speculators enjoyed during the worst of the public health crisis might not materialize anytime soon. But that doesn’t mean that you can’t acquire value stocks with high potential for the second half of this year. Basically, thousands upon thousands of publicly traded securities exist. It’s practically inevitable that at least a handful will go either unnoticed or underappreciated. And that reality undergirds the case for cheap stocks set to bounce back.
On this list, we’ll be exploring ideas that popped up on Gurufocus’ cheap (but hopefully viable) equities screener list. With that, below are the best bargain stocks to buy for H2 2023.
Bargain Stocks to Buy: United Microelectronics (UMC)
An interesting conundrum, semiconductor firm United Microelectronics (NYSE:UMC) gained nearly 10% since the beginning of this year. However, in the trailing month, UMC slipped more than 10%, implying inclusion among the bargain stocks to buy for speculators.
To be sure, it’s a risky proposition. Recently, compatriot Taiwan Semiconductor (NYSE:TSM) announced that its top line may fall as much as 16% in the second quarter due to a weakened global economy. That sent other semiconductor firms tumbling due to concerns about smartphone and PC chip demand.
At the same time, the consumer tech space has proven very resilient, in part because of the robust labor market. Right now, the market prices UMC at a forward multiple of 11.28. As a discount to projected earnings, UMC ranks better than 87.22% of its peers. Also, the company continues to run as a revenue growth machine and posts consistent profits, year in and year out. For contrarians, UMC possibly rates as one of the best stocks for H2 2023.
Bargain Stocks to Buy: Mosaic (MOS)
Primarily, Mosaic (NYSE:MOS) – which specializes in the mining of phosphate and potash and the collection of urea for fertilizer – suffers from economic and geopolitical uncertainty. With war raging in Eastern Europe and no end in sight, the framework doesn’t bode well for business predictability. Since the start of the year, MOS fell more than 7%.
It’s an ugly backdrop. At the same time, Mosaic presents a case for bargain stocks to buy. Earlier this year, a Seeking Alpha article pointed out that MOS fell 50% from its highs. Therefore, the valuation has become very attractive. Presumably, if that was the case then, it’s the same case now.
Presently, MOS trades at trailing earnings multiple of 4.9, which is well undervalued compared to the sector median of 13.61X. Also, the market prices shares at a forward multiple of 8.8. While not as great of a deal on paper, the sector median comes in at 10.68x. Also, let’s not forget the cynical fundamental catalyst: a low supply of critical goods should eventually lead to high demand. I think that’s the case irrespective (within reason) of market conditions, making MOS one of the top stocks to buy now for gamblers.
Bargain Stocks to Buy: Resources Connection (RGP)
At first glance, Resources Connection (NASDAQ:RGP) seems like one of the bargain stocks to buy from an ironic perspective. Since the start of the year, RGP fell almost 12%. In the trailing one-year period, the equity suffered a loss of more than 18%. As a business consultancy firm, Resources would likely be relevant in bullish market cycles. However, under difficult circumstances, enterprises find efficiencies through layoffs.
To put it bluntly, companies don’t need to be consulted on the obvious: dwindle the labor force and make each worker do more. Apply the subtle fear of additional layoffs and you’ll get worker bees in line. On a per-capita basis, this dynamic should boost productivity.
However, Resources offers a talent acquisition business unit that could come in handy. Moving forward, the labor market could slacken. If so, enterprises need to be doubly sure they’re hiring the right people. Resources can help. It also doesn’t hurt that RGP trades at trailing earnings multiple of 8.82. That’s far lower than the 17.33X sector median. Therefore, RGP may be one of the value stocks with high potential.
On paper, a security with a price tag of almost $3,600 seems awfully strange for bargain stocks to buy. However, Seaboard (NYSEAMERICAN:SEB) brings to the table a discount based on key financial metrics. On a broader level, the company’s diverse multinational agribusiness and transportation business may prove resilient amid vague economic waters.
At the most basic level, people must eat, irrespective of economic conditions. In this manner, Seaboard benefits from sitting on the lower rungs of the trade-down effect. People can trade down to cheaper alternatives of commonly purchased goods or they can outright cut all discretionary purchases. You can’t cut food.
As for the discount, SEB trades at a trailing multiple of 9.03, below the sector median of 12.34x. Also, while the company prints a robust three-year revenue growth rate (per-share basis) of 18.2%, SEB trades at 0.38x trailing sales. Thus, it’s one of the cheap stocks set to bounce back (well, cheap against key multiples).
A developer and producer of chemicals and biofuels, FutureFuel (NYSE:FF) carries significant implications for energy infrastructures. While the present focus centers on transitioning hydrocarbon energy sources to renewable alternatives, in order to achieve broader sustainability, society will likely need energy diversification. FutureFuel may help in that regard, sparking investor interest.
Since the start of the year, FF stock gained over 10% of its equity value. In the trailing year, it moved up nearly 38%. Despite the strong performance metrics, FF still ranks among the bargain stocks to buy. For one thing, in the trailing five years, it’s down 29%.
More importantly, the market prices FutureFuel shares at a trailing multiple of 8.59. In contrast, the sector median clocks in at 19.89X. Also, the company posts a three-year revenue growth rate of 24.5%, outpacing nearly 83% of its peers. Nevertheless, FF trades at 0.98 times trailing sales. Thus, it has the potential to be one of the best stocks for H2 2023.
A medical diagnostics and research firm, Fonar (NASDAQ:FONR) specializes in advanced MRI scanning machines. Unlike traditional equipment, however, Fonar’s MRI enables patients to be scanned in the positions in which they experience problems, such as sitting, standing, bending, etc. It may lead to a breakthrough in the diagnostics business, hence the interest among certain speculators.
However, these speculators are few in number. Since the start of the year, FONR gained only 1.5%. In the trailing year, shares have performed better at over 18% up. Still, the five-year picture presents concerns, with shares slipping almost 34%. However, contrarians might ping FONR as one of the bargain stocks to buy.
Aside from the compelling “modular” MRI narrative, FONR trades at a trailing multiple of 11.55. In contrast, the sector median stat stands at a much loftier 23.72X. Also, the market prices shares at a tangible book multiple of 0.76. That’s lower than 92.31% of the competition.
Hello Group (MOMO)
A quirky idea for bargain stocks to buy, China-based Hello Group (NASDAQ:MOMO) is a leading player in its home nation’s online social networking space. Per the language of the company’s website, Hello Group enables users “…to discover new relationships, expand their social connections and build meaningful interactions.” These interactions include romantic relationships, as per Hello’s 2018 dating app acquisition.
To be sure, MOMO presents high risks. Just look at its five-year chart. A loss of 75% will quickly force a loss of appetite for conservative investors. At the same time, MOMO’s on a resurgence. In the trailing one-year period, shares gained almost 126%.
Given the slow but steady recovery in the Chinese economy, pent-up demand for social interactions may be exercised. And that’s what really makes MOMO’s forward multiple of 7.58 so attractive. Ranked lower than 88.89% of its peers, Hello Group offers a relevant and wanted service. Therefore, it’s one of the top stocks to buy now for speculators.
On the date of publication, Josh Enomoto 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.