Ahead of possible volatility in the market, investors may find some measure of confidence in undervalued stocks. From a psychological perspective, companies that sit well outside the well-beaten path offer the perception that they trade below their intrinsic value. In other words, overlooked equities mentally prep investors for the long game.
Also, another segment to consider in this arena is undervalued stocks that analysts love. While expert guidance is not guaranteed to be any better than random voices on the internet, more than likely, you’ll find wisdom here. Not everybody can be an analyst as it takes experience and acumen. Also, if experts make too many wrong calls, they could be out of a job.
Finally, it’s possible that less-appreciated securities may benefit from lower downside risk. Essentially, because they’ve already absorbed pain or have never felt the spotlight, there’s no high point to fall from. Again, that’s no guarantee of volatility protection. Anything can happen in the market.
Still, heavily hyped ideas could be due for a correction, allowing those in the shadows to maybe thrive. And on that note, below are undervalued stocks that analysts love.
PBF Energy (PBF)
A petroleum refining and logistics firm, PBF Energy (NYSE:PBF) produces and sells transportation fuels, heating oils, lubricants petrochemical feedstocks and other petroleum-based products. Further, the company owns and operates multiple refineries throughout the U.S. While the hydrocarbon space might seem anachronistic, economic realities may keep PBF in business.
Specifically, consumer pressures prevent people from buying new (or new-to-them) cars, let alone making the transition to electric vehicles. Therefore, petroleum will probably be relevant for many years to come. That may suit discerning investors just fine. Right now, PBF trades at a lowly trailing-year revenue multiple of 0.15x.
However, even with this subterranean multiple, PBF prints a three-year revenue growth rate of 22.4%, above 73.9% of rivals. In addition, PBF trades at only 0.96x tangible book value, favorably below 63.75% of sector peers. Analysts rate shares a consensus moderate buy with a $58.56 price target, implying almost 27% growth.
A biotechnology firm that was thrust into the limelight a few years back, BioNTech (NASDAQ:BNTX) became almost a household name thanks to its specialty in messenger-RNA-based innovations. As a result, its partnership with Pfizer (NYSE:PFE) to develop a Covid-19 vaccine helped curb the global health crisis. However, with fading fears of the SARS-CoV-2 virus, the perceived relevance of BNTX dropped.
Since the beginning of the year, shares have fallen almost 36%, which of course is an ugly print. However, because of the red stains in the charts, BNTX just might be one of the undervalued stocks. Certainly, on paper, it’s difficult to ignore its attractive qualities. Specifically, BNTX trades at only a 5.3x trailing earnings multiple. In contrast, the sector median stat comes in at 29X.
To be sure, falling demand for Covid-19 vaccines crimps the overall narrative. But it’s also important to point out BioNTech’s solid, cash-rich balance sheet. With patience, BNTX could eventually recover. Analysts peg shares a moderate buy with a $135 target, implying nearly 42% upside potential.
Adams Resources (AE)
Another energy-related idea among undervalued stocks that analysts love, Adams Resources (NYSEAMERICAN:AE) engages in the marketing of crude oil, natural gas, and liquid chemical products. With other business units covering specialties such as transportation, “terminalling” and storage, Adams’ relevancies center on the midstream and downstream portions of the energy value chain.
Fundamentally, the company should benefit cynically from economic realities. Aside from consumer pressures, there’s also the matter of U.S. population growth. Through a combination of natural births and immigration, demand for energy – no matter the source – will likely rise higher. Therefore, the hydrocarbon ecosystem is necessary to feed this heightened demand profile.
Looking at the financials, Adams features some less-than-desirable metrics, it must be stated. However, it also trades at 0.87x book value, below nearly 66% of its peers. Currently, experts at Singular rate AE stock a “buy” with a $46 target. This forecast projects a 46% rise in the share price.
Based in South San Francisco, California, Veracyte (NASDAQ:VCYT) focuses on novel approaches that bring solutions that traditional diagnostics have not considered. Per its website, Veracyte leverages innovations in genomic technology and machine learning to enable more confident diagnostic, prognostic, and treatment decisions in challenging diseases. These include various cancers along with idiopathic pulmonary fibrosis.
While a relevant enterprise, VCYT has incurred choppy trading dynamics this year. Since the January opener, shares have given up around 12% of equity value. Still, that’s not terrible, all things considered. Also, the good part for speculators of undervalued stocks is the financial bargain. Right now, shares trade at a trailing sales multiple of 4.58x, below the sector median of 8.37x.
However, that doesn’t mean it’s a slouch. Over the past three years, Veracyte clocks in a revenue growth rate of 16.7%. That’s above 62.39% of sector rivals.
Also, analysts peg VCYT a moderate buy with a $32.40 price target, implying over 62% growth.
Tower Semiconductor (TSEM)
Hailing from Israel, Tower Semiconductor (NASDAQ:TSEM) might not be the safest idea for undervalued stocks if you’ve been following the news. Since the beginning of the year, TSEM has lost over 45% of equity value. Still, in recent sessions, there appears to be signs of vitality. So, it’s possible that a bottom may have been printed. Time will tell on that one.
What’s more of a sure thing is Tower’s relevance. As a manufacturer of integrated circuits (ICs) using specialty process technologies, the company stands at the forefront of digital innovation. On a financial note, shares only trade at 9.45x trailing earnings. That compares favorably to the sector median stat of 23X.
In addition, the market prices TSEM at 1.68x sales and 1.28x book value, both stats coming in under their respective sector medians. Also, it’s consistently profitable with solid operating and net margins. Lastly, Craig-Hallum’s Richard Shannon rates TSEM a “buy” with a $36.50 target, implying over 55% upside.
Healthcare Services (HCSG)
Billed as an experienced leader in managing housekeeping, laundry dining, and nutritional services within the healthcare industry, Healthcare Services (NASDAQ:HCSG) might get overlooked because people don’t usually think about the internal logistics of underlying sector facilities. Of course, such management is vital to the proper functionality of the wider ecosystem. Still, that doesn’t make HCSG any less risky.
Since the beginning of this year, HCSG suffered sharp double-digit losses. Frankly, it gets worse from a trailing one-year perspective, as well as the trailing five years. At the same time, speculators might view Healthcare Services as significantly de-risked. After all, flavors of the week such as artificial intelligence hogged most of the spotlight. A relevant player like HCSG may thus be one of the undervalued stocks that analysts love.
On paper, shares trade at a forward earnings multiple of 14.39x, lower than the sector median of 21.89x. Also, the company benefits from stability in the balance sheet. Despite the red ink, analysts rate shares a moderate buy with a $16.33 target, implying 82% growth.
Headquartered in Mount Laurel Township, New Jersey, inTest (NYSEAMERICAN:INTT) is a global supplier of innovative test and process technology solutions. It focuses on applications in manufacturing and testing in key target markets. These include automotive (EVs), defense and aerospace, industrial, life sciences and security. As well, inTest provides front and backend support of the semiconductor manufacturing industry.
What makes INTT an attractive candidate for undervalued stocks that analysts love is the behind-the-scenes stagehand business model. Or, in sports terms, it’s like the pit crew of a motor racing team. While the driver gets the glory, the pit crew keeps the car moving. As well, strategy teams inform the driver of the best moves, thus hopefully staying ahead of the competition.
In other words, inTest may be boring but it helps keep the broader value chain clicking. Notably, INTT trades at a trailing sales multiple of 1.24x, below the sector median of 2.67x. However, the three revenue growth rate is stout at 22.6%. Finally, analysts rate INTT a consensus moderate buy with a $27 target, implying nearly 100% upside.
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.