The stock market’s been wobbly in the past couple of weeks, influenced by Federal Reserve officials’ cautious stance on cutting interest rates. However, with a cooling job market, it’s only a matter of time before we see our first cut. And so, this adds to the allure of cheap stocks.
However, given the current market scenario, betting on cheap stocks may be more of a contrarian move. Yet, with multiple interest rate cuts on the horizon, they present themselves as promising avenues for potential long-term gains. Therefore, let’s examine three cheap stocks to buy that offer robust upside potential ahead.
JD.com (JD)
Chinese EV stocks like JD.com (NASDAQ:JD) have had a torrid few years in the stock market. Zero-Covid19 policies, regulatory crackdowns and a general slowdown in the Chinese economy have played spoilsport for JD.
However, the company effectively survived the storm and has now positioned itself for robust growth. It has outperformed market expectations in the past four consecutive quarters across both lines while handsomely rewarding its stockholders in the process. Moreover, it recently announced a massive $3 billion share purchase program after a solid Q4 where it bested revenue and earnings estimates again. Results showed a 10.1% bump in non-GAAP net income per ADS to 75 cents. Also, it reveals a 3.6% jump in net sales to $43.1 billion, outperforming analyst forecasts.
Furthermore, the eCommerce giant looks to integrate artificial intelligence (AI) services to improve customer experience. With its generative AI offering in ChatRhino, JD aims to revolutionize retail and logistics. By blending generalized and proprietary data, it can deliver unique solutions. Additionally, it recently unveiled its Spring Dawn Initiative with new AI services. This will aid merchants that potentially increase revenues and reduce operational costs by up to 50%.
Kinder Morgan (KMI)
Traditional energy giant Kinder Morgan (NYSE:KMI) consistently impresses with its robust cash flow. Backed by solid long-term contracts and government-regulated rates, its stable business continues to reward its shareholders handsomely.
Additionally, Kinder Morgan sets the bar remarkably high with its 6.1% dividend yield, backed by six consecutive years of payout growth. Also, the firm reinvests about 50% of its cash flow into further dividend increases and growth-oriented investments. Furthermore, the firm expects to generate $5.1 billion in distributable cash flows, representing an 8% increase year over year (YOY).
With an eye on the future, the company expects the West Texas Intermediate to average $82 this year. However, given the current geopolitical tensions, I expect oil prices to rise even further. So this points to strong top-and-bottom-line growth ahead for KMI. Considering its financial stewardship and clear growth trajectory, its current price tag is mighty attractive.
Pfizer (PFE)
Pfizer (NYSE:PFE) is one of the biggest biopharmaceutical players undergoing a major shift in recent years. Due to waning demand for its pandemic offerings, it’s now a more innovative biotech player that’s on the hunt for its latest blockbuster drug.
Despite being in the transition phase of sorts, there’s plenty to like about PFE’s long-term growth profile. Let’s consider the array of drugs in its portfolio. Some of those include Abrysvo for RSV immunization, Oxbryta targeting sickle cell disease (SCD) and Nurtec for migraine relief. Additionally, it boasts an attractive pipeline comprised of novel 0oi219 treatments for respiratory conditions, SCD and cancer cachexia. These further showcase its superb long-term growth trajectory.
Despite the headwinds, though, it continues to maintain its solid dividend profile, marked by 13 years of consecutive dividend growth and a 6.30% yield backed by stellar profitability metrics.
On the date of publication, Muslim Farooque 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.
