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Buy Undervalued Stocks
The stock market is overvalued and probably ready for a correction but there are still opportunities to buy undervalued stocks. An insightful article in InvestorsPlace suggests that IBM, Chevron and the shipping container company, Textaniner Group Holdings, are all undervalued stocks and set to go up against the tide of a falling market.
The S&P 500 is currently trading at more than 20 times earnings – its price-to-earnings ratio of 20.7 is 42% higher than its historical median P/E of 14.6. Simply put: Stocks, as a whole, are richly valued.
But not all stocks are overvalued right now.
A recent look across the market has revealed a few currently undervalued stocks – two of which have some pretty big, familiar brands. And, as a perk, all three of these stock picks are yielding at least 3% in dividends. (That’s a pretty nice sweetener while you wait for the market to truly appreciate these companies.)
Each of these companies operates in different industries, so you’ll have to be on the watch for different catalysts to spark each of these undervalued stocks. But a little diversity isn’t exactly going to hurt your portfolio.
Read the article for details. The point is that the market is not always efficient and it is in spotting inefficiencies that you can buy undervalued stocks and make a tidy profit.
And More Undervalued Stocks
Barron’s joins in by listing 11 undervalued stocks that they think are good buys. The writer is especially interested in bargains in the European market.
We like Europe-centered, regionally focused companies in sectors like consumer discretionary, hotels and telecoms. We like German retailer Metro ( MEO.Germany ) – it took a hit for uncertainty over its Russian business, but it’s a capital reallocation story, as well as one about consumption in Europe. We like telecoms given the increasing movement and trend for cross-border consolidation. We own Koninklijke KPN ( KPN.Netherlands) and Vodafone Group ( VOD ). Swiss telecom Sunrise Communications ( SRCG.Switzerland ) is a typical cheap and good quality company. In hotels, we like Accor ( AC.France ), a French company that operates Sofitel and Novotel – while not well known in the U.S., this is the largest hotel operator in Europe. Ultimately, the goal of the current management is to separate the real estate activities into a real estate investment trust – if that happens, it would be an extremely desirable business. Since its aim is to lighten up its assets, return on capital is going up fast.
One caveat when looking at European companies is that if and when Greece defaults on its debts and leaves the Euro there may be significant currency fluctuations that could affect EU investments.
The Motley Fool looks at undervalued stocks in biotech.