While it’s not hard to find scorching hot enterprises in relevant sectors (such as artificial intelligence), their rich premiums tend to incentivize a contrarian pivot toward the top value stocks to buy. According to Investopedia, a value stock represents shares of an enterprise that seemingly trade at a lower price relative to fundamental metrics, typically earnings or sales.
On the flip side, growth plays tend to eschew profitability concerns for expansionary endeavors. And while growth should not be taken out of the picture completely, rumblings about Federal Reserve policy suggest that undervalued stocks may offer a higher probability of success. After all, if interest rates rise, growth-focused endeavors will likely fade due to higher borrowing costs.
Of course, you want to be careful with stock market bargains. Sometimes securities can be too cheap, leading to possible value traps. Instead, investors should focus on solid enterprises that just ran into a rough patch. With that in mind, below are stock market bargains to consider.
I’ve discussed technology specialist Photronics (NASDAQ:PLAB) before so I apologize if I’m repeating myself. Nevertheless, this leading worldwide manufacturer of integrated circuit and flat panel display (FPD) photomasks deserves serious consideration for top value stocks to buy. According to Data Bridge Market Research, the photomask sector will grow from $4.52 billion in 2021 to approximately $5.91 billion by 2029.
Granted, that might not sound like much. However, Photronics offers significant acumen in the space, having been in the business for over 50 years. Plus, with a market capitalization of $1.65 billion, the company can grow with the space while dominating an important cog of the tech ecosystem.
On a financial note, PLAB makes a solid case for undervalued stocks to buy, featuring trailing earnings multiple of 13.27, below 74.63% of companies listed in the semiconductor industry. As well, PLAB trades at a sales multiple of 1.87X, well below the sector median stat of 2.83x.
Given that the company’s three-year revenue growth rate (per-share basis) clocks in at 19.2% or above 67.66% of the competition, PLAB is arguably among the more credible bargain stocks to buy.
Ingles Markets (IMKTA)
Headquartered in Asheville, North Carolina, Ingles Markets (NASDAQ:IMKTA) is a leading supermarket chain with operations in six southeastern states. Per its public profile, Ingles operates 198 supermarkets. As well, the company operates neighborhood shopping centers, most of which contain an Ingles supermarket. Plus, it owns a fluid dairy facility that supplies the company with supermarkets and unaffiliated customers.
Fundamentally, IMKTA ranks among the top value stocks to buy because of a potential monetary policy shift. So far this year, the labor market has been robust, meaning that more dollars chase after fewer goods. While this framework bodes well for discretionary purchases, as the Fed tightens the money supply, job losses may mount. In turn, consumers may turn toward essential goods, which cynically benefits Ingles.
On a financial note, investment data aggregator Gurufocus notes that IMKTA commands six good signs and no warning signs. Among the positives are expanding operating margins and strong financial strength. Right now, IMKTA trades at a trailing earnings multiple of 6.33. This contrasts with the retail defensive sector’s median trailing multiple of 16.63x.
Resources Connection (RGP)
As a self-proclaimed human capital partner, Resources Connection (NASDAQ:RGP) presents a risky framework for value stocks to buy. While enterprises can always use efficiency-bolstering ideas and professional connections, current market conditions make RGP a tough sell. With competition fierce under a tight labor market, companies don’t need middlemen entities to find new talent; they just need to raise their compensation offer.
However, if the Fed succeeds in clamping down on soaring prices, the labor market may become slack. Flooded with job applicants, more companies may find it difficult to separate the wheat from the chaff. In that case, Resources Connection may offer a smarter, more directed approach to talent acquisition. As well, trying circumstances might entail making the most use of limited resources, something that RGP specializes in.
Financially, RGP trades at a trailing earnings multiple of 8.86, well below the business services median multiple of 17.32x. As well, the market prices RGP at 6.3X free cash flow and 6.18X operating cash flow. Both stats rate well below their respective sector median values. Thus, Resources makes for an enticing idea for undervalued stocks.
Optex Systems (OPXS)
Based in Richardson, Texas, Optex Systems (NASDAQ:OPXS) specializes in precision optical assemblies for both the defense and retail sectors. Fundamentally, Optex makes plenty of sense, particularly regarding the former component. I’m not going to dive into the gory details. However, it’s safe to say that the world is no longer as (relatively) stable as it once was. In turn, a severe armed conflict may only be one misunderstanding away.
Undeniably, it’s a terribly cynical framework. However, Wall Street has responded vigorously to the thesis. Since the start of the year, OPXS gained over 17% of its equity value. In the trailing one-year period, shares skyrocketed over 72%. Even with these remarkable stats, there’s a case to be made that Optex is undervalued.
First, shares trade at a price/earnings-to-growth (PEG) ratio of only 0.25. In sharp contrast, the PEG ratio for the aerospace and defense industry stands at 2.16X. Second, the company offers decent stability in the balance sheet, with an Altman Z-Score of 3.61 indicating low bankruptcy risk. With revenue growth starting to come back from its fiscal year 2021 lows, OPXS ranks among the top value stocks to buy for speculators.
Haynes International (HAYN)
One of the world’s largest developers, manufacturers, and distributors of high-performance nickel- and cobalt-based alloys for use in high-temperature and corrosion applications, Haynes International (NASDAQ:HAYN) might not be an exciting enterprise. Nevertheless, it offers vital products to a wide range of industries. Plus, the market has taken notice, with HAYN gaining nearly 8% since the Jan. opener.
What’s more, in the trailing year, shares soared almost 61%. Fundamentally, much of the excitement centers on Haynes’ relevance toward the space economy. Thanks to its specialty in robust alloys, Haynes components are found in most rocket parts for satellite launches. Enticingly, McKinsey & Company notes that the space industry could command a market value of $1 trillion by 2030.
Despite the importance Haynes plays regarding the broader aerospace sector, HAYN represents one of the bargain stocks to buy. Most notably, the market prices shares at a forward multiple of 10.57. As a discount to projected earnings, Haynes ranks better than 84.39% of the competition. Also, HAYN trades at an ultra-low PEG ratio of 0.36x. If you’re seeking to speculate on value stocks to buy, it might not get much better than this.
Based in Herndon, Virginia, ePlus (NASDAQ:PLUS) is a leading consultative technology solutions provider that helps customers imagine, implement, and achieve more from their technology. According to its corporate profile, ePlus claims the highest certifications from top technology partners and lifecycle services expertise across key areas including security, cloud, and data center, among many others.
Since the beginning of this year, PLUS lived up to its ticker symbol, gaining nearly 31% of equity value. Over the trailing one-year period, shares swung up nearly 16%. At first glance, ePlus might not seem like one of the stock market bargains. However, PLUS trades at a trailing earnings multiple of only 13.1. In contrast, the software industry features a median multiple of 28.5X.
Not only that, the market prices shares at a sales multiple of 0.76x and a tangible book multiple of 2.54x. Both stats rank noticeably below their respective sector median values, particularly the sales stat. Finally, PLUS clocks in a PEG ratio of 0.88x. This stat ranks better than 73.48% of the competition, making ePlus one of the top value stocks to buy.
Hailing from Phoenix, Arizona, Avnet (NASDAQ:AVT) is a leading global technology distributor and solutions provider. Specifically, Avnet supports customers at each stage of a product’s lifecycle, from idea to design and from prototype to production. Per its corporate profile, the enterprise’s unique position at the center of the technology value chain enables it to accelerate the design and supply stages of product development so customers can realize revenue faster.
While I wouldn’t classify Avnet as a household name, those in the know have high hopes for AVT. Since the start of the year, shares swung up more than 18%. And in the trailing one-year period, they returned over 14% of equity value. Despite the solid stats in the price chart, AVT is also among the value stocks to buy.
For example, Avnet posts a well-above-average three-year revenue growth rate of 11.4%. Nevertheless, AVT trades at only a trailing sales multiple of 0.18x ranked below 94.45% of its peers. In addition, the market prices AVT at a trailing earnings multiple of 5.41, below 95.29% of rivals. If you’re into speculating, this is one of the undervalued stocks to consider.
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.