Growth stocks have significantly outperformed value stocks so far this year, with a 15% discount later to Morningstar’s fair value estimates.
This compares to an 8% cut for growth stocks, so if you’re looking to buy stocks, now might be a good time to look at the stock’s value.
In an internal interview with Morningstar, Dave Sequeira, President, US Market The company’s strategic, recommend Take a look at these five undervalued stocks. “Undervalued” means that it is trading below Morningstar’s fair value estimates.
maserish
(mac) – Get a free report
Owner of first class shopping malls. Morningstar Ditch Rating (A Permanent Competitive Advantage): No Ditch. Morningstar fair value estimate: $26.50. Last quote: $9.55.
“The death of shopping malls has been greatly exaggerated,” Sakira said. “Consumers are returning to the malls.”
In addition, Class A malls are evolving to include more than just retailers, he said. There is an increase in restaurants, health clubs, and doctors’ offices. Sekera also likes Macerich’s dividend yield – 7.2% on a forward basis.
carnival
(CCL) – Get a free report
Great cruise line. Morningstar Ditch: None. Morningstar fair value estimate: $22. Last quote: $10.25.
The topic here is the normalization of consumer behaviour. All major cruise lines are undervalued, Skira said. As for Carnival, bookings have continued to grow, and they’ve been able to implement price increases. “There was a significant rise in consumer deposits, which indicates a prior commitment to travel,” he said.
In the next two years, the headwinds of a strong dollar and higher fuel prices should return to normal, Sequeira said, allowing Carnival’s profit margins to rebound to historical averages.
Borg Warner
(BWA) – Get a free report
Auto parts supplier. Morningstar trench: narrow. Morningstar fair value estimate: $81. Last quote: $44.80.
Morningstar predicts that by 2030, two-thirds of all new cars produced will be electrified – all-electric or hybrid. “BorgWarner has one of the strongest product portfolios for electric vehicles,” said Sekera. “Whichever EV manufacturer is the best performer, BorgWarner will benefit.”
Medtronic
(MDT) – Get a free report
Medical device manufacturer. Morningstar Trench: Wide. Morningstar fair value estimate: $112. Last quote: $89.70.
“It’s the largest manufacturer of medical devices,” Sekera said. “We continue to see a backlog of medical procedures postponed from the pandemic.” In addition, “This is one of the best positioned stocks for the aging baby boomers.”
Citigroup
(c) – Get a free report
big bank. Morningstar Trench: None. Morningstar fair value estimate: $75. Last quote: $46.30.
Sakira said the stock is being traded at a discount of 40% to the tangible book value. “We’re not looking for much: we don’t see strong earnings growth. They may even have to take small capital strikes, ”as the bank restructures.
But, he said, “over time, they should recover the cost of capital.” After that, the stock will rise towards the tangible book value. The other three largest banks (JPMorgan Chase, Bank of America, and Wells Fargo) are trading at or above this level.
Sekera noted that while you wait for this stock to appreciate, you get a dividend yield of 4.5%.