What Is Undervalued stocks ?
Undervalued is a financial term referring to a security or other type of investment that is selling in the market for a price presumed to be below the investment's true intrinsic value. The intrinsic value of a company is the present value of the free cash flows expected to be made by the company. An undervalued stock can be evaluated by looking at the underlying company's financial statements and analyzing its fundamentals, such as cash flow, return on assets, profit generation, and capital management to estimate the stock's intrinsic value. more
An undervalued stock is defined as a stock that is selling at a price significantly below what is assumed to be its intrinsic value. For example, if a stock is selling for $50, but it is worth $100 based on predictable future cash flows.
1- Bank of America (BAC 0.25%) has underperformed the overall stock market in the recent downturn, with shares 35% below their 52-week high. And there are some legitimate reasons. Most significantly, there's a possible recession looming, which can cause loan delinquencies to spike higher and can cause demand for new loans to collapse.
2- Real estate investment trust (REIT) EPR Properties (EPR 2.16%) actually outperformed the market for most of the 2022 downturn. However, when its second-largest tenant (Regal Entertainment) prepared to declare bankruptcy in late summer, it made investors nervous. Now the stock is about 30% below the highs and has an 8.2% dividend yield.
3- Autodesk recently reported results for the third quarter of its fiscal 2023 (ended Oct. 31), and with it came a huge announcement. The board of directors approved a $5 billion share repurchase plan. For context, Autodesk's current market capitalization is $42.6 billion, so this would reduce the outstanding shares by around 12% at today's price.
4- Chemical products manufacturer Huntsman is currently executing an ambitious capital allocation plan that will see the business create a simplified portfolio with a net leverage ratio of around 0.7x.
To achieve this, the firm is seeking to sell its Textile division for an enterprise value of $718 million, after which the proceeds will be used to strengthen its strategic acquisition goals.
5- The Chemours Company is a global leader in the production of advanced performance materials. The firm manufactures membranes, coatings and titanium technologies for businesses in the aerospace, construction and automotive industries.
Having been spun off in 2015, the company still benefits from the more than 200 years of experience that its parent operation, DuPont, has built up over that time.
Indeed, Chemours has managed to carve out a reputation for quality and innovation all of its own, with its products used in a wide range of applications such as air conditioning, refrigeration and water purification.
The firm’s share price has risen 33% recently after the company reported a strong revenue and profits beat in the third quarter of 2022. Its sales were up 6% at $1.8 billion, while net income of $240 million spiked earnings by $0.25 to bring in a total of $1.52 per share.
6- British drugmaker GlaxoSmithKline saw its stock slip 20% this year.
While that’s just about in line with the wider market as a whole, it’s actually a poor return when judged against the overall Healthcare sector, which has done fairly well in 2022. more