3 great bargains you can buy today
Has a seemingly cheap stock caught your eye? Names like these seem and give the impression that they are offering you more for your investment as long as you can get started while the prices are low. Too often we learn that these names are cheap for a reason and end up staying cheap due to lack of performance.
Against this background, here are three low-cost stocks that are unlikely to fall into this trap. That is, they are rated at relatively low valuations, but these valuations do not fully or fairly indicate the likely future growth for the underlying organizations. You only have to look over a year on the road to see it.
Allowed, Ford engine (NYSE: F) was much more of a bargain just a few days ago, before jumping 16% on updated EV plans. The company now predicts that by 2030, 40% of its global unit sales will be electric cars and trucks. Even so, at the cost of just nine times the expected earnings for next year, Ford stocks have plenty of room to keep going.
Image source: Getty Images.
It’s curious. Those investors who keep an eye on the automaker probably remember when Jim Hackett, then Ford’s chief executive, boldly (and quite publicly) launched into the electric vehicle waters in 2017, affecting $ 11 billion. $ of capital to EVs in 2018, to be rolled out by 2022. Current CEO of the Week Jim Farley recently increased Ford’s EV development budget to $ 30 billion. It’s an exciting thing, sure, but not very surprising – the business was always going to require more money.
What has undoubtedly changed are the investors receptivity to the idea that any car manufacturer in addition You’re here (NASDAQ: TSLA) could be a serious competitor of the electric vehicle. Ford’s all-electric Mustang Mach-E kicked off that psychological shift, selling 6,614 units in the United States in the first quarter of the year, which in particular stole market share from Tesla. The company also reports 70,000 purchase reservations for the new all-electric F150 pickup truck unveiled last week, underscoring the idea that Ford is emerging as a force in the electric vehicle market.
Well it should. Deloitte estimates that global unit sales of electric vehicles will grow at an annual rate of 29% over the next 10 years, reaching an annual rate of 31.1 million automobiles by 2030. The world will need more ‘a builder to achieve this.
the Goldman Sachs (NYSE: GS) the name may not turn heads like it used to. But, this Wall Street icon is still stock worth owning, which you can afford for little more than a song.
Goldman does a bit of everything from investment banking and brokerage to asset management and more. He even moves into the world of consumer / retail banking under the nickname Marcus. No branch represents more than 26% of its turnover (it is asset management), and although all its branches of activity are ultimately linked to the economy, the management of five different branches limits a much of the earnings volatility that its competitors may face. The trade-off of this income diversification is a cap on growth potential. One or two units may perform well in any given quarter, but rarely do all five thrive simultaneously.
It’s worth it, especially right now.
With the end of the pandemic in sight in some countries and the global economy surprisingly well positioned, Goldman is ready for whatever the rebound throws in its way. Take the example of investment banking. Despite the disruption created by the COVID-19 contagion, the company says its investment banking order book is now at record levels. What makes this detail even more incredible is that merger and acquisition (M&A) activity is expected to increase for the foreseeable future, building on the rebound in mergers and acquisitions that started to take shape in the second half of the year. from last year. As a perspective, a recent Bain & Co. survey of business executives suggests that mergers and acquisitions will drive 45% of companies’ revenue growth for the foreseeable future, up from an average of 30% over the years. last three years.
Newcomers can tap into Goldman’s forward-looking part of that growth at a very affordable forward-looking price-to-earnings ratio of 10.4.
The Boeing Company
Finally, add Boeing (NYSE: BA) to your list of cheap stocks to think about buying today.
Yes, Boeing is the company that botched the design of its popular 737 MAX passenger jets. This is also the same Boeing that has seen demand for airplanes dry up since COVID-19 took hold, limiting air travel; airlines are not interested in buying new planes until they are sure they need them. It’s even the same Boeing that now has $ 62 billion in debt, of which over $ 40 billion was added just in the past year. A stock is only a good deal if it has a legitimate chance of rising and if its price is 47 times the projected profits for the next year, and taking into account the portion of its future profits that will be needed only for paying the interest, Boeing is pushing the boundaries of what might be considered a “good deal”.
Look one, two, and even three years later, however. Much lost in recent noise is that Boeing is digging his way out of that hole.
As for the 737 MAX, customers are finally committing again to the now fixed jet. Southwest Airlines (NYSE: LUV) recently ordered 100 of the latest iterations of the passenger jet, although CEO Gary Kelly recently explained that the addition of southwest routes could spur the need for 500 new passenger jets. SMBC Aviation, Alaska Air Group, Dubai Aerospace, and United Airlines also represent only part of the 307 orders for 737 MAX already placed this year. This is an encouraging indication of confidence in Boeing’s solution for the once besieged aircraft.
The demand is also a vote of confidence in the rebound in air travel, as is the fact that Boeing is still sitting on a total of nearly 5,000 unfulfilled aircraft orders. To that end, although the International Air Transport Association (IATA) recognizes that it could take until 2023 and even 2024 for air travel to rebound from the 52% of pre-COVID traffic that we are currently seeing, the IATA predicts an 88% recovery in pre-COVID traffic shaping up next year. Airlines, however, can’t wait until many customers are ready to fly again to start sourcing planes.
Boeing shares are well up from the lows of last March. With stocks trading 30% below the typical 2019 price, investors continue to underestimate the scope and speed of the company’s recovery. In more normal years like 2017 or 2018, this aircraft manufacturer can earn in the order of $ 10 billion, which gives the company many ways to work on its debt while reinvesting in its future growth.
10 stocks we prefer over Boeing
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James Brumley has no position in the stocks mentioned. The Motley Fool owns shares and recommends Tesla. The Motley Fool recommends Alaska Air Group and Southwest Airlines. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.