Value stocks

3 best value stocks to buy this month

The Consumer Price Index (CPI) for January 2022 revealed that year-on-year inflation reached 7.5%. This exceeded analysts’ expectations and is the highest rate in forty years.

In times of high inflation, value stocks generally outperform growth stocks. As inflationary pressure is should persist, betting on good quality deals could pay off. Investor interest in value stocks is evident in the SPDR Series Trust SPDR Portfolio S&P 500 Value ETF (SPY) 12.8% returns over the past year.

That’s why today we’re highlighting 3 stocks from our Top 10 Value screen, which is just one of the top 10 performing screens on our POWR Screens Service 10 (more on this below). JBS SA (JBSAY), Compañía Cervecerías Unidas SA (CCU) and Valhi, Inc. (HIV) are currently trading at lower prices than their peers despite strong fundamentals. So these stocks could be solid bets now.

JBS SA (JBSAY)

Based in Sao Paulo, Brazil, JBSAY is active in the meat processing sector. The company processes and markets animal proteins worldwide. It offers beef, pork, chicken and lamb products and by-products, food products, pet food, concentrates and bresaola. Its segments include Brazil, Seara, JBS USA Beef, JBS USA Pork and PPC.

On December 13, 2021, JBSAY announced that it had agreed to acquire Italian delicatessen Grupo King’s. It will be formed by Rigamonti, a subsidiary of JBSAY. As part of the deal, Rigamonti has also received a 20% stake in pork producer Piggly and will own the business operations of King’s and Principe. JBSAY’s Managing Director, Gilberto Tomazoni, said: “This agreement follows our strategic objective of growth in products with very high added value. This places us among the leaders in the Italian health sector and also strengthens our commercial strategy in the United States”

JBSAY’s net revenue increased by 32.2% year-on-year to reach R$92.62 billion ($17.93 billion) for the third quarter ended September 30, 2021. The company’s net profit rose 142.1% year-on-year to R$7.64 billion ($1.47 billion). Also, his Adjusted EBITDA rose 74.2% year-on-year to reach 13.92 billion reais ($2.69 billion).

In terms of EV/S and forward P/S, JBSAY’s 0.45x and 0.24x are below industry averages of 1.88x and 1.35x, respectively. Additionally, its forward EV/EBITDA of 3.65x is 70.3% below the industry average of 12.32x.

Analysts expect JBSAY’s fiscal 2021 revenue to grow 43.1% year-on-year to $68.58 billion. Over the past year, the stock has gained 48% to close the last trading session at $13.87.

JBSAY’s strong fundamentals are reflected in its POWR Rankings. It has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

It has an A rating for value and sentiment and a B rating for growth and stability. It is ranked No. 2 out of 84 stocks in the B rating Food manufacturers industry. Click here to see JBSAY’s other ratings for Momentum and Quality.

Compañía Cervecerias Unidas SA (CCU)

CCU is based in Santiago, Chile. It is a diversified beverage company operating as a brewer, soft drink producer, water and nectar producer, wine producer and pisco distributor. The Company’s segments include Chile, International Trade and Wine. Its portfolio consists of a range of alcoholic and non-alcoholic beer brands.

For the fourth quarter ended December 31, 2021, CCU’s revenue increased 37.1% year-over-year to CLP 822.35 billion ($1.02 billion). The company’s net profit rose 33.8% year-on-year to CLP 73.64 billion ($0.09 billion). Additionally, its EPS came in at CLP 199.3, representing a 33.7% year-over-year increase.

In terms of EV/S and forward P/S, the CCU’s 1.25x and 1.07x are below industry averages of 1.88x and 1.35x, respectively. Additionally, its forward non-GAAP PER of 16.69x is 7.8% below the industry average of 18.12x.

For fiscal 2023, CCU’s EPS and revenue are expected to grow 23.7% and 15.1% year-over-year to $1.23 billion and $3.28 billion, respectively. The stock has gained 1.1% year-to-date to close the last trading session at $16.59.

CCU’s POWR ratings reflect a strong outlook. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system.

It has an A rating for quality and a B rating for value. In category B Beverages industry, it is ranked #4 out of 36 stocks. To view CCU’s other ratings for Growth, Momentum, Stability and Sentiment, Click here.

Valhi, Inc. (HIV)

VHI is active in the chemicals, component products and real estate management and development sectors. It operates through its wholly and majority owned subsidiaries, including NL Industries, Inc., Kronos Worldwide, Inc., CompX International, Inc., Tremont LLC, Basic Management, Inc. and LandWell Company.

VHI’s net sales increased 26.2% year-over-year to $578.90 million for the third quarter ended September 30, 2021. The company’s net income increased $153.2 % year over year to reach $39 million. Additionally, its EPS came in at $1.36, representing a 151.8% year-over-year increase.

In terms of EV/EBIT and EV/EBITDA, the VHI of 6.23x and 4.77x are below industry averages of 13.03x and 8.82x, respectively. Additionally, its forward non-GAAP PER of 6.96x is 51.8% below the industry average of 14.43x.

Analysts expect VHI’s FY2021 EPS and revenue to grow 111.2% and 14.2% year-over-year to $3.78 billion and $2.11 billion dollars, respectively. The stock has gained 30.6% over the past year to close the last trading session at $26.29.

VHI’s strong fundamentals are reflected in its POWR ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system.

It has an A rating for value and a B rating for stability and sentiment. It is ranked No. 4 out of 89 stocks in the A rating Chemical products industry. Click here to see VHI’s other ratings for growth, momentum and quality.

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Shares of CCU were trading at $15.93 per share on Monday afternoon, down $0.66 (-3.98%). Year-to-date, the CCU is down -2.93%, compared to a -8.96% rise in the benchmark S&P 500 over the same period.

About the Author: Dipanjan Banchur

Ever since he was in elementary school, Dipanjan had been interested in the stock market. This enabled him to obtain a master’s degree in finance and accounting. Currently, as an investment analyst and financial journalist, Dipanjan is particularly interested in reading and analyzing emerging trends in financial markets. After…

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