Buying undervalued companies is an excellent way for investors to make steady returns over a long period of time. But it’s important to distinguish an undervalued stock that still has potential in the future and a company that has seen a considerable amount of sell-off due to issues that may lead the business into turmoil.
Some companies like the ones I mention below may not be desirable to investors in the moment because they are within an industry that is struggling. But, for those looking for long-term growth, companies like these are great picks due to the possible rebound in the future, and buying in at a low price will look like a great move.
LyondellBasell Industries (LYB)
LyondellBasell Industries (NYSE:LYB), headquartered in Houston, Texas, is a commodity chemical company serving Europe, Asia and North America. LyondellBasell’s chemicals are used in coatings, household goods, cleaners, fuels and automotive fluids. They are also a leading producer of industrial polymers such as polyolefins.
Over the past year, their share price has risen by 15%. They reported earnings for the third quarter of 2023, which stated that total revenue dropped by 13% and net income rose by 31% compared to the previous year. And they announced that $448 million was given back to shareholders in the form of share buybacks and dividends in the third quarter of 2023. On Dec. 8, LyondellBasell announced the Ethylene Oxide & Derivatives Business and corresponding facility to INEOS Oxide, a plastics manufacturer, for $700 million.
LyondellBasell also offers a strong dividend yield of 5.40% annually. And they have raised their dividend payout to investors for ten consecutive years. LYB distributes dividend payments quarterly, and its most recent dividend amount was $1.25 per share, which was paid to investors on Dec. 4. This essentially makes them a great buy due to their generous dividend yield. It’s important to consider that they have a much larger dividend yield than their peers, which can be positive or negative depending on how you look at it.
CNH Industrial (CNHI)
CNH Industrial (NYSE:CNHI), located in London, UK, is an agriculture and construction equipment manufacturer. They offer a wide range of equipment, such as tractors, combine harvesters, skid steers, bulldozers, excavators and backhoe loaders. CNH Industrial also provides its customers with financing options.
They have seen their share price fall by 31% year-to-date, primarily due to an overall downturn in the farming equipment industry and recent third-quarter earnings that have seen reduced income and a drop in future guidance.
On November 7, their third-quarter earnings for 2023 were released, stating that total revenue and net income remained practically unchanged compared to the previous year.
CNH Industrial offers a 3.57% dividend yield, distributed once per year, and their most recent dividend payment was $0.40 per share. With the downturn in the overall industry, this is a unique opportunity for investors to buy in at a reduced price.
Fluor (FLR)
Fluor (NYSE:FLR), located in Irving, TX, is an engineering and construction equipment producer specializing in urban solutions. They provide management services for infrastructure development, energy solutions primarily regarding decarbonization and nuclear power services, and they also offer technical services to government and military organizations.
On Nov. 3, they reported earnings for the third quarter in which they reported total revenue that grew by 10% compared to the previous year. They reported a net loss of $24 million for Q3 2022 and a net income of $181 million for the third quarter of 2023. They also raised their company guidance for the remainder of 2023.
Year-to-date, they have seen an increase in their share price of 16% and still offer investors a decent option for an undervalued stock.
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.
