With the U.S. economy running at full steam and the labor market continuing to impress onlookers, the concept of value stocks might not be the most popular idea. After all, many of the usual suspects of 2023 are still printing strong returns. However, just for prudence sake, it might be a good idea to consider some bargain opportunities.
For one thing, the market always goes through an ebb and flow. Just because everybody’s betting on the same horse doesn’t necessarily mean that the horse will win. Further, as sentiment accelerates beyond the underlying fundamental or intrinsic value, fears of bag-holding could rise. And with certain segments of the equities sector skyrocketing, that bag could end up being an expensive one.
Second and just as importantly, the month of February tends to be a slow month for equities. And MarketWatch noted that it’s even worse during election years. Of course, I’m not suggesting that the market will tumble. However, it pays to be prepared and diversified. On that note, below are value stocks to buy on the dip.
BP (BP)
At first glance, BP (NYSE:BP) might not seem the best idea for value stocks to buy on the dip. After all, there’s true value – the kind that eventually rises – and then there’s false value. With several oil-producing nations cooperating to push hydrocarbon prices higher only to yield disappointing results, the narrative doesn’t seem that encouraging for BP. As one of the oil and gas supermajors, it needs the price to recover.
Unsurprisingly, BP stock suffered much choppiness over the past several months. And in the trailing 52 weeks, BP dipped almost 4%, a disappointing print no matter how you look at it. However, BP still qualifies in my opinion as one of the value stocks because it just needs patience. With the U.S. economic machinery running at full speed, positive sentiment could roll down to other regions.
Moreover, increased activity should lead to increased consumption of critical resources. And despite the efforts to the contrary, the world still runs on oil. With shares trading at only 7.3X forward earnings and analysts rating shares a moderate buy with a $43.93 target, this is one of the credible bargains to pick up.
Himax Technologies (HIMX)
With so much focus centered on technology plays, you might think that compelling innovators would be difficult to find among value stocks to buy. Well, let me introduce you to Himax Technologies (NASDAQ:HIMX). According to its Form 20-F disclosure, Himax is a fabless semiconductor solutions provider. Specifically, it focuses on display imaging processing technologies. It happens to be a worldwide market leader in display driver integrated circuits (ICs) and timing controllers.
Fundamentally, HIMX ranks among the more attractive value stocks to buy because of its broad relevancies. Through its business, it serves various applications, including TVs, laptops, monitors, mobile phones, tablets, automotive, digital cameras and car navigation, among many others.
Overall, Grand View Research points out that the global digital image processing market size reached a valuation of $5.16 billion in 2022. Further, experts believe the segment will expand at a compound annual growth rate (CAGR) of 19.7% from 2023 to 2030. At the forecast period’s culmination, the industry might print revenue of $21.73 billion.
Lastly, Robert W. Baird’s Tristan Gerra pegs shares a “buy” with a $7 target, implying 26% upside.
Ocuphire Pharma (OCUP)
Easily the riskiest idea on this list of value stocks to buy, Ocuphire Pharma (NASDAQ:OCUP) is a late clinical-stage ophthalmic biopharmaceutical company. According to its regulatory disclosure, Ocuphire specializes in developing and commercializing therapies for the treatment of refractive and retinal eye disorders. Further, its current pipeline includes two small molecule product candidates targeting several of the aforementioned indications.
Fundamentally, OCUP could rise from its present doldrums – it lost more than 27% of equity value in the past 52 weeks – thanks to the relatively massive total addressable market. Per Grand View Research, the global retinal disorder treatment market size reached a valuation of $12.57 billion in 2022. From 2023 to 2030, analysts project sector expansion of a CAGR of 9.3%. By the end of the forecast, the industry could be worth $25.69 billion.
On paper, OCUP ranks among the value stocks because of its low multiples to earnings and tangible book. However, what really caught my eye was the strength of its zero-debt balance sheet. Yes, it’s speculative but it’s primed to go the distance. And analysts rate shares a moderate buy with a $19 price target, projecting 636% growth.
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.
