5 undervalued stocks to buy before March

2022 has started on a weak note for the US stock market. All three major stock indices are down year-to-date, and nasdaq has had a return of less than 10%. Searching for undervalued stocks in a broader stock market that is still near all-time highs seems like a challenging task.

The world is waiting for news about whether or not Russia will invade Ukraine. If this occurs, a global liquidation of financial assets should follow, even if it is short-term. However, investing in undervalued stocks makes sense at this point, as investors will have a safety margin to use, even if volatility may increase. Let’s not forget that big-value tech stocks have rewarded investors who ignored valuation in 2022 with steep losses in contrast to a booming market in 2021.

Here are five stocks that are undervalued, have strong earnings growth rates, and relatively low P/E (price to earnings) and PEG (price to earnings to growth) ratios. The Current S&P 500 The price-earnings ratio stands at 25.5. All of these stocks have a much lower P/E ratio and generally have strong fundamentals:

  • dow (NYSE:DOW)
  • toll brothers (NYSE:TOL)
  • Financial Synchrony (NYSE:SYF)
  • Sports and Outdoors Academy (NASDAQ:AOSO)
  • Stellantis (NYSE:STLA)

The bottom line is that these five stocks are now relatively undervalued and have strong growth prospects. They could become even cheaper in a general market sell-off scenario due to rising interest rates and geopolitical concerns. From a long-term perspective, its current share prices are very attractive.

Undervalued stocks to buy: Dow (DOW)

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DOW shares are up 9% in 2022, defying broader negative investment sentiment. Dow has a broad portfolio of silicon-based products and solutions.

In 2021, sales growth jumped 43% to $55 billion and net income soared 415% to $6.3 billion. The term dividend and yield of $2.80 and 4.6% respectively are attractive.

Dow’s TTM P/E is 7.4, and its forward P/E is 9. With a PEG ratio of 0.30 and expected earnings per share (EPS) growth 30%, there is a strong bullish case for DOW stock.

The price-to-sales (P/S) ratio of 0.8 is also indicative of an undervalued stock, while the 41% return on equity it’s excellent.

Toll Brothers (TOL)

Residential Neighborhood Subdivision Skyline Aerial Shot

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Shares of homebuilder Toll Brothers have lost nearly 24% so far this year. The US real estate market remains strong: “The NAHB US housing market index fell 1 point to 83 in January 2022 from a 10-month high of 84 in December, and slightly below market forecasts of 84.”

In 2021, Toll Brothers revenue increased 24% to $8.8 billion, and net income grew 87% to $834 million.

Diluted EPS increased to $6.63, an increase of 95%. The TTM P/E is 8.2 and the forward P/E is 5.3. The stock has a PEG ratio of 0.45 and a expected EPS growth of 26%. The P/S of 0.77 is very attractive.

Undervalued stocks to buy: Synchrony Financial (SYF)

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Synchrony Financial offers credit products such as credit cards, business credit products, and consumer installment loans. Rising interest rates in 2022 creates a positive narrative that has the potential to turn year-to-date losses of nearly 3% into gains.

A term dividend and yield of 88 cents and 2% respectively don’t impress, but the dividend still adds to the total holding return. This undervalued stock converging to its intrinsic value will provide both capital gains and dividend income.

In 2021, revenue decreased 12.5% ​​to $11.2 billion. On the positive side, net income increased 202% to $4.2 billionand diluted EPS grew 223% to $7.34.

The TTM P/E is 6 and the forward P/E is 8.1. The PEG ratio is 0.6 and the expected EPS growth it is 23%. That’s not bad at all for a financial services company.

Sports and Outdoors Academy (ASO)

A woman uses a laptop on a mat with a pair of dumbbells and a bottle of water on the floor next to her.

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Academy Sports and Outdoors is a US outdoor recreation and sporting goods retailer that sells a variety of products including sports equipment, garden and outdoor equipment, and health and fitness tools. exercise.

ASO shares have lost 18% so far this year, but are up 41% in the past year. 2021 revenue increased 18% At $5.7 billion, net income soared 157% to $308.8 million and diluted EPS increased 155% to $3.39.

The TTM P/E is 5.3 and the forward P/E is 5.9. The PEG ratio is 0.42 and the expected EPS growth it is 15%.

The P/S of 0.5 and company value/earnings ratio of 0.69 confirm that ASO shares are relatively undervalued and a value stock pick among specialty retail companies.

Undervalued stocks to buy: Stellantis (STLA)

A flag with the Stellantis logo flies in front of a building with the logos of some of its car brands, including Abarth, Lancia, Fiat, Alfa Romeo and Jeep.

Source: Antonello Marangi / Shutterstock.com

Just over a year ago, Fiat Chrysler and the PSA Group merged to become Stellantis. The company is the third largest automobile manufacturer by revenue and operates a large number of internationally known brands.

Many investors focused on electric vehicle manufacturers in 2021 for their growth and profits, ignoring the broader picture of the auto industry. Most of these hot EV stocks have generated big losses so far this year. But STLA shares are almost flat in 2022 with a gain of nearly 4% year to date.

Stellantis presents an opportunity for exposure to the internal combustion engine cars that still dominate the automotive industry worldwide, while also participating in the future of electrification for mobility. Economies of scale should have a lasting positive impact on profitability.

The P/S of 0.27 is attractive, though 0.03% net margin is not that much. Still, a very small positive net margin is better than a negative one. The TTM P/E is 4.6 and the forward P/E is 4.2. The PEG ratio is 0.12 and the expected EPS growth it is an impressive figure of 38%.

As of the date of publication, Stavros Georgiadis, CFA did not have (directly or indirectly) any position in the securities mentioned in this article. The views expressed in this article are those of the writer, subject to the InvestorPlace.com Posting Guidelines.

Stavros Georgiadis is a CFA charter holder, equity research analyst, and economist. He focuses on US stocks and has his own stock blog at thestockmarketontheinternet.com/. He has written several articles for other publications in the past and can be reached on Twitter and on LinkedIn.

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