Best Value Stocks 2019


Best Value Stocks 2019

Value investing has always proven a key factor in the success of most of the world’s most successful investors. This highly-discerning group of investors would usually buy cheap or value stocks that then go on to outperform market expectations. Either the company engages in buybacks year-over-year, or the market revalues it once the true potential is discovered.

While your success in this regard will depend on how you’re able to discern value and differentiate between a stock price that’s low and one that’s actually cheap, below are our top picks for the best value stocks 2019 that may be worth more than the cheap price.

Kohl’s (KSS)

Kohl’s, like many other brick-and-mortar retailers, is currently facing significant challenges. But even when you factor all of that in, its stock appears discounted, compared to similar companies. It has a PEG ratio of 0.77 which seems rather cheap considering the retail giants have consistently outperformed its peers. Kohl’s is contending with the same challenges that have threatened and have forced big players like Sears and JC Penney to close several business locations. Kohl’s on the other hand, appears to be on top of the situation.

The company, rather than closing up stores have partnered with names like Planet Fitness and Aldi for shared-tenancy. Apart from the cash flow this deal presents, the store is also poised to benefit from the traffic of its new partners. Kohl’s balance sheet remains impressive with debts falling 40% since it peaked in 2015. Overall, it finished the fiscal year 2018 a tad above contemporaries. Beyond the struggles and the cheap stocks, Kohl’s approach to managing its challenges are yielding steady progress and making significant profits. If you’re in the market for value stocks 2019, Kohl’s is definitely worth the attention.

Exelixis (EXEL)

Exelisis trades its stocks on Nasdaq as EXEL, fully focused on oncology. The cancer niche is undoubtedly one of the fastest growing sectors within the pharmaceutical industry. Exelisis seems to be excelling where most others have faltered. Even at that, the biotech still has a PEG ratio of 0.47 which is the lowest of its kinds. But then, Exelixis is struggling to get the attention of investors mainly due to the fact that cabozantinib is bracing up for a face-off with top-flight drug combos from Bristol-Myers Squibb as well as Merk & Co.

Ordinarily, this shouldn’t be much of a challenge but it seems like the market just can’t grasp it. Cabozantinib should have fewer challenges in establishing its authority as a later-line treatment in niche cancer. According to the company’s commentary after the first quarter, the drug is making major headways. As it stands, it’s commercial potential and profitability is not threatened. While the stocks are trading at an incredibly low price at the moment, it may possibly double over the next five years, even in the face of these competitions.

Twitter (TWTR)

While it’s becoming increasingly harder to find values and bargains in today’s pricey markets, Twitter stocks trading on the NYSE appears to be an unlikely place to look. Fact is Twitter has P/E which is even higher than the already overpriced range for most S&P 500, the shares appear largely underappreciated, with undeniable value. Over the past four years, Twitter has excelled at doing what really matters. Its focus on connecting people while cutting out excess expenses has greatly improved its cash flow.

Even without considering the huge leap from 2015 to 2016, Twitter’s free cash flow has maintained a CAGR of 30% each year. And while it may not boast an audience as large as Facebook’s, the presence of major influencers on the platforms continues to help widen the user-base. Its monetizable daily active users, for instance, grew an impressive 11% in the first quarter. While it may be far from being similar to your conventional stock, Twitter continues to improve. With that much potential, it’s safe to say that Twitter stocks are undervalued and are one of the value stocks of 2019.

Wells Fargo

Well’s misfortunes started with the massive scandal of 2017 with the discovery that the banking giant had fraudulently opened millions of accounts for customers without their consent. The following periods were characterized by a series of lawsuits, costly fines, and the eventual removal of Tim Sloan as the bank’s CEO. The US Federal Reserve delivered what everyone would think is Well’s biggest blow. The regulator had prevented the bank from making any attempts at growing its assets than what it held late 2017 until the bank had made ‘sufficient improvements’. Thus Wells Fargo was practically locked out of growing its base at a very crucial period.

With all of these in place, it seems the bank could not be stopped from growing its earnings and profits after all. Wells have survived the fallout and growing bigger by the day. Yet, the market still views it distastefully with its stocks trading at surprising rates compared to its earnings multiple as well as its contemporaries. Wells’ book value has proven it’s a cheap stock. Its dividends remain the highest among its peers. It turned out that the cap on assets has not done so much to its financial strength and its real earnings growth.  Wells’ stocks at the moment are as cheap as it has been halfway into the past decade. It’s undoubtedly a value stock at this price in 2019.

Bottom Line

Stock investors, like everyone, love bargains. Bargains like these often help you make the most money but then, diversification can also be very important to cushion the uncertainty that trails the market. Finding cheap value stocks in 2019 can be fun and highly profitable. Still, a lot of research and planning should also go into this. Remember that even with that, you may still be wrong sometimes. But then, getting it right on other quality value stocks will more than make up for the occasional lapses and errors in judgments.

Jeff Clarkson

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