Savvy investors are always on the lookout for value stocks. The dream of finding solid companies going through a rough patch and trading much lower than their appropriate valuation. Especially without any major catalyst that makes them undesirable. Sometimes, companies trade lower than their fair value due to outside factors even though their financials are solid. Below, I will discuss three value stocks that are trading at a discount, and offer an excellent opportunity for investors looking to buy.
SilverBow Resources (SBOW)
SilverBow Resources (NYSE:SBOW) Is an oil and natural gas company that focuses on exploration and development of properties within South Texas.
On August 14, SilverBow announced that it would be purchasing the remaining assets of Chesapeake Energy (NASDAQ:CHK) located in Eagle Ford, Texas. It is projected this deal will increase the output of resources for SBOW by approximately 50%. The agreement is being financed by credit facility borrowing. The share price for the stock is up 39% over the past year, but it has fallen recently to $34 per share. In the last month the stock has fallen by 18%. This is due to its offering of 3 million shares of common stock. The sale will help raise capital for corporate purposes and pay off loans largely from the Chesapeake Energy deal.
In the short term, the Eagle Ford acquisition may cause some uncertainty with investors due to the hit to their profits. With the massive increase in total output potential, SilverBow is willing to take that risk.
American Airlines (AAL)
American Airlines (NASDAQ:AAL) is a passenger airline company that operates over 900 planes. They provide air travel and cargo transport services through their widespread network of airport hubs.
AAL stock has been on a steady decline since June losing over 30% of it’s value. The significant drop in the share price is due to a couple of factors, including a new contract for airline pilots, which improves benefits and take-home pay for America’s 15,000 pilots. The other factor would be fear surrounding increased fuel prices and how that will negatively affect the company and the industry as a whole.
Within their second-quarter earnings release, the company still produced record profits due to the massive increase in domestic and international travel. It reported a revenue increase of 7%, and net income nearly tripled to $1.3 billion compared to the year before.
FS KKR Capital (FSK)
FS KKR Capital (NYSE:FSK) is a company that engages in the investment of debt securities, which are an asset that provides interest payments for the issuer. Some examples of debt securities include government bonds and certificates of deposit. And they also offer other secured loans for business development purposes.
Over the past year, FSK has seen its share price grow by approximately 17%. It’s second-quarter earnings report, which was released in August. It stated that total interest income increased by 27%, and its net loss shrank by 68% to $87 million. Boasting an impressive 12.41% dividend yield this is one of the value stocks that will benefit your portfolio in the long-term.
As of this writing, Noah Bolton did not hold (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.
