Investing in these stocks now could be akin to entering the ground floor before a major upswing, as market sentiment begins to shift and investor confidence grows. With a focus on long-term value creation and sector-specific dynamics, investors can uncover potential windfalls in markets that are just beginning to rebound. This strategic investment approach ensures recovery-led gains and positions one’s portfolio to benefit from broader macroeconomic recoveries and sector-specific booms. Hence, here are three discounted stocks to buy now.
General Motors (GM)
As we navigate through a tense political landscape with looming tariffs against China, General Motors (NYSE:GM) is positioned to benefit, given its significant domestic operations.
Underpinning GM’s resilience is its strategic management decisions. The company has actively engaged in share buybacks. This move underscores management’s confidence in the company’s financial health and enhances shareholder value. Moreover, the company’s first-quarter results were particularly impressive. GM reported a non-GAAP EPS of $2.62, surpassing Wall Street expectations by a considerable margin.
GM faces potential headwinds from a weaker macroeconomic environment, which could dampen consumer spending and lower auto sales. Yet, GM’s proactive strategies in share repurchases and technological advancements and a solid balance sheet place it in a strong position to navigate challenges. With a forward P/E ratio of 5.6x, considerably lower than the industry average, and a strong earnings outlook, GM stands out as a resilient player in a fluctuating market. It’s a top pick for investors seeking value and growth.
CVS Health (CVS)
CVS Health (NYSE:CVS) has been a leading player in the healthcare and retail pharmacy landscape. The company is known for its extensive network of CVS pharmacy retail stores, the pharmacy benefits manager CVS Caremark, primary care provider Oak Street Health and health insurance provider Aetna. Despite facing challenges, CVS presents a compelling investment opportunity. This is especially true considering recent market reactions seem to underscore its potential undervaluation.
CVS’s stock experienced significant volatility following the first quarter of the 2024 earnings report, reflected mixed financial outcomes and triggered a sharp decline in stock price to about $55 per share. It marked a steep discount from previous levels. The stock is currently trading at a forward P/E of 10.8x, a significant discount from the sector median of 27x.
Moreover, CVS pays a substantial dividend, offering an appealing forward dividend yield of 4.4% that complements the investment case for those seeking income along with price appreciation. The potential for a rebound in stock price, supported by fundamental business strengths and strategic initiatives, makes CVS a promising candidate for investors looking for undervalued opportunities in the healthcare sector.
EOG Resources (EOG)
EOG Resources (NYSE:EOG) has pioneered advanced drilling techniques that have substantially lowered its breakeven costs. It’s one of the most cost-efficient producers in the shale industry. The company’s focus on premium drilling locations has enabled it to maintain profitability even in fluctuating market conditions.
The Utica Shale play, primarily located in eastern Ohio, has recently come into focus as a potentially game-changing asset. The company’s aggressive acreage acquisition strategy has positioned it favorably in this play, which promises a rich mix of oil and natural gas liquids.
EOG Resources’ financial discipline is a cornerstone of its industry leadership. The company boasts a strong balance sheet. It’s underscored by a low debt-to-assets ratio and significant liquidity, providing ample flexibility to navigate market cycles. The company’s stock is trading at a discounted valuation, with a forward P/E of 9.95x. This is below the sector’s forward P/E of 11.62x.
On the date of publication, Mohammed Saqib did not hold (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.
Mohammed Saqib is a research analyst with experience in equity research and financial modeling. He has extensively covered stocks listed in the tech sector using fundamental analysis as the cornerstone of his approach. Currently pursuing a master’s degree in finance, Saqib is dedicated to obtaining the CFA charter to augment his expertise in the field further.