May is not always the ideal time to sell stocks. In fact, it might be the perfect time to buy these 3 undervalued stocks.
May is known for the old saying “sell in May and go away,” which suggests general caution in the stock market. However, golden opportunities can emerge during this time for those who know where to look. undervalued stocks, often overlooked by investors, can be great investments, with high growth potential and significant returns.
To identify these opportunities, you need to analyze some key financial indicators such as the PEG ratio, the P/B ratio and the EBITDA growth. These metrics help identify companies that, despite having solid fundamentals, are valued below their true potential.
In this article, we’ll show 3 undervalued stocks to buy in May 2024. These stocks could prove to be great additions to an investment portfolio, even in a month often characterized by sell-offs and volatility.
1. Toyota
Toyota Motor is one of the world’s largest automakers, with a strong presence in the United States and a headquarters in Japan. Its share price, at 3,510 JPY ($234.20), might seem high at first glance, but its PEG ratio of 0.14 and P/B ratio of 1.37 indicate that it may be significantly undervalued compared to its potential. The company has seen extraordinary growth over the past year, with a 40.7% increase in EBITDA and a 73.3% surge in EPS. These numbers indicate that Toyota has solid fundamentals and that investors may find a unique opportunity in its stock.
EPS and EBITDA growth is primarily driven by strong sales of hybrid-electric vehicles (HEV), a rapidly expanding segment of the automotive market, coupled with cost-cutting strategies that have improved profitability. This has allowed Toyota to make impressive gains over the past year, with its share price up around 28% year to date.
Despite this rapid rise, Toyota’s valuation metrics remain reasonable, suggesting the stock may be undervalued. Additionally, value investors will find it interesting that Toyota has historically been a low-volatility stock. With a dividend yield of 1.8%, it is an attractive option for those looking for stability and sustainable growth in the stock market. These reasons make Toyota a great investment to consider now.
2. Stellantis
Stellantis is one of the world’s leading vehicle manufacturers based in the Netherlands, known for its iconic brands such as FIAT, Alfa Romeo, Lancia, Peugeot, Chrysler, Dodge, Jeep and Maserati. With a share price of 23.17 euros ($24.60) and a PEG ratio of 0.33, Stellantis appears undervalued relative to its growth potential. Furthermore, the P/B ratio of 0.86 suggests that the stock is trading at a lower price than book value, a sign that investors may find value in this company.
The company has seen notable growth over the past year, with a 36.4% increase in EBITDA and a 28.3% increase in EPS. These numbers reflect Stellantis’ ability to expand its business, thanks to its diversity of brands and its focus on the growing electric vehicle sector. The recent partnership with Chinese electric vehicle manufacturer Leapmotor confirms the company’s commitment to innovation and sustainability.
Another element that makes Stellantis attractive to investors is its share buyback program, worth 3 billion euros, expected by June 5, 2024. This buyback could support the share price and increase shareholder returns. Additionally, the 6.7% dividend yield is remarkably high, offering investors a regular income stream.
3. Baidu
Baidu is the Chinese IT giant known for its search engine and related services, as well as selling advertising and cloud storage. With a stock price of $102 and a PEG ratio of 0.08, Baidu presents itself as an interesting choice in the landscape of technology stocks. Compared to its US counterpart, Alphabet (GOOG), Baidu is valued at lower multiples.
Despite a recent stagnation in revenue, Baidu has demonstrated a pattern of double-digit earnings surprises, potentially attractive to investors. Additionally, the company is making large investments in artificial intelligence and autonomous driving, sectors highly regarded by US investors. These growth prospects could push Baidu’s stock price higher, making it an attractive pick for investors looking for opportunities in an evolving technology market.
| DISCLAIMER The information and considerations in this article should not be used as the sole or primary basis for making investment decisions. The reader maintains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk propensity and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to the public for savings. |
Original article published on Money.it Italy 2024-04-27 16:01:00. Original title: 3 azioni sottovalutate da comprare a maggio 2024
