When it comes to the stock market, volatility is its middle name, which makes it relevant to invest in undervalued value stocks. A margin of safety is key, especially when we’re dealing with uncertainty in financial markets. Though recent inflation and job growth data hint at possible interest rate cuts later this year, predicting outcomes based on the Federal Reserve’s track record is challenging. Hence, it becomes imperative for investors to invest in undervalued opportunities with a discerning eye to make the most of the current market situation.
However, despite the attractiveness of undervalued value stocks, investors must exercise caution and avoid catching falling knives. That said, here are three value stock bets offering robust upside ahead.
General Motors (GM)
General Motors (NYSE:GM) is a true powerhouse in the automotive space that has held its own despite the electric vehicle (EV) revolution. EVs have dominated the investor conversations of the automotive scene in recent years, but GM and some of its peers have found a silver lining as weaknesses in the EV market emerge. This shift offers an opening for GM as it looks to leverage its hybrid technologies along with its burgeoning EV and autonomous vehicle initiatives effectively.
GM’s recent financials are a testament to its agility and potential. In the first quarter (Q1), GM reported a robust 8% increase in sales on a year-over-year (YOY) basis, reaching $43 billion. This positive trend is further amplified by a healthy 19% increase in adjusted earnings-per-share (EPS) to $2.62, leading to an upward revision of its full-year financial outlook. These figures not only reflect GM’s strong performance but also hint at the promising future ahead.
As it advances, GM’s focus on novel technologies, such as its powerful Ultium EV platform and investments in connected vehicle services, will add new layers to its illustrious growth trajectory. Hence, before these plans come to fruition, you can scoop up GM stock for just 2.82 times forward cash flows, roughly 72% behind the sector median.
ACM Research (ACMR)
ACM Research (NASDAQ:ACMR) is an unsung entity in the semiconductor industry that’s made impressive strides of late. artificial intelligence tailwinds led to ACMR stock rising 114% in the past year and roughly 30% in the past six months alone. In the past month, though, the stock’s cooled off, presenting an excellent opportunity to load up on it at just 1.9 times forward sales estimates.
ACM manufactures wet-cleaning and front-end processing equipment, which is critical for producing logic and memory chips. Though it has historically been a high-growth business, it hit its strides last year with the burgeoning demand for generative AI technologies.
In its most recent quarterly showing, ACM Research reported a staggering 105% increase in sales YOY, reaching $152.2 million. Perhaps more importantly, its EPS witnessed a dramatic jump, doubling to approximately 26 cents per share from the prior year. Moreover, its Q1 results marked the eighth consecutive quarter, where it smashed estimates across both lines.
Hence, ACM Research’s stellar financial success highlights its critical role in the semiconductor space and its ability to capitalize on next-generation technological demands.
Chevron (CVX)
The future of the oil industry could be anybody’s guess at this point. The progression toward carbon neutrality is real, but there’s no denying the crucial role oil plays in providing affordable energy is tough. Amidst these discussions, Chevron (NYSE:CVX) presents itself as a key player in the global energy landscape. Despite its current challenges, including the volatility in crude oil prices and pressure from market and regulatory forces, it remains an excellent bet at current prices.
Chevron was the most shorted large-cap U.S. stock in April, mostly due to declining oil prices and missed Q1 financial expectations. Additionally, there’s been apprehension about its proposed $53 billion takeover of Hess (NYSE:HES), which is still pending regulatory approval.
Nevertheless, Chevron has a lot of cash—north of $14.8 billion in free cash flows, to be exact. Following the dip in its price, it presents itself as an excellent dividend value pick, yielding more than 4% with 36 consecutive years of payout expansion.
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
