Value stocks

3 Market Value Stocks That Are Too Cheap To Ignore

Jhe Nasdaq the sale of technology has gone to borderline capitulation for many once hot names like DocuSign.

Investors probably don’t want to worry about volatility as they can’t wait to relax this holiday season. Fear nothing. caterpillar (NYSE: CAT), Hunter’s Society (NYSE:HUN), and The Chemours company (NYSE:CC) are three value stocks that can add stability to your portfolio. Here’s what makes each a great buy now.

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Poor results, but still great value

Daniel Foelber (Crawler): The stage was set for Caterpillar to soar in 2021: widespread vaccinations, an economic recovery, low interest rates and an industrial sector looking to get back on its feet worsened in a tightly helical spring. Still, supply chain issues, rising raw material costs and a pandemic that isn’t going away have hurt Caterpillar’s actual results.

Caterpillar recognizes that economic expansion has not yet reached full swing. His results were good but did not live up to expectations. Despite this backdrop, Caterpillar is still making a lot of money, but its stock price is underperforming the market. This momentum has brought Caterpillar’s price-to-earnings (P/E) ratio down to 21. Admittedly, this remains above Caterpillar’s historical levels, and all the more impressive given that the company is producing somewhat weak results. But it is much less than the market average.

The good news is that many of the factors that helped Caterpillar have a great year are still largely in play. The oil and gas industry was a pleasant surprise for Caterpillar, bolstering its energy and transportation division. The company’s mining segment has directly benefited from customer demand to increase supply. Forecasts suggest that free cash flow (FCF) and revenue growth are heading in the right direction.

As a cyclical business, Caterpillar’s results are highly dependent on the broader economy. Yet through it all, the company has increased its dividend for 27 consecutive years, making it one of the few cyclical dividend aristocrats. With a current dividend yield of 2.3% and a reasonable valuation, Caterpillar looks like a good stock to buy now.

Finding Value with Huntsman

Lee Samaha (Huntsman Corporation): In a market that has looked expensive for some time, it’s somewhat surprising that investors can find a stock trading at less than 9 times estimated 2021 earnings, but that’s the case with the chemicals company and of Huntsman materials.

Of course, there is usually a pattern why companies have such low valuations. For Huntsman, it’s likely a combination of two factors: its recent history of underperforming margins relative to its peers and concerns that its current earnings strength may not be sustainable.

On the last point, the recent earnings season has been full of corporate warnings of skyrocketing material cost inflation. Huntsman manufactures many of these materials. The fear is that these price increases will not be sustainable, and when the market cools, so will Huntsman’s earnings.

For example, management reported a significant 41% increase in revenue in the first nine months of 2021 compared to the same period in 2020. Growth was driven by higher average selling prices; Huntsman’s largest segment, polyurethanes (used in insulation, automotive, construction, spray foam, etc.), saw a 31% increase in average selling prices in the first nine months .

The market is right to be cautious about Huntsman’s price sustainability, but that may be too harsh. After all, it is difficult to predict where prices will go in the future. Moreover, it is not just about favorable end markets. The company has made significant progress in shedding its more commodity-focused businesses in favor of higher-margin downstream businesses.

There is also a real opportunity for Huntsman to improve its profit margin in line with its peers:

HUN Operating Margin Chart (TTM)

HUN (TTM) operating margin data by YCharts.

It all adds up to an exciting value proposition, one that bargain hunters might find impossible to pass up.

A stock of packing materials for budget-conscious investors

Scott Levine (The Chemours Company): Now that the turkey and the stuffing are behind us, it’s time to shop for holiday gifts. To help stretch budgets a bit more – perhaps allowing us to buy an extra freebie or two – investors are looking for deals on the stock market. With the S&P500 Frequently flirting with all-time highs, options for value investors may seem limited. However, there is one prominent chemical worth taking a close look at: Chemours.

The company is a leading producer of titanium dioxide, a compound supplied to customers in the apparel, agricultural and packaging industries. Chemours also supplies an assortment of other specialty chemicals such as Freon for refrigeration and Teflon for the military. Because its customer base spans a wide range of industries, Chemours mitigates the risk associated with a precipitous decline in any industry, which impacts Chemours’ business.

Like so many other companies over the past few months, Chemours has suffered from supply chain issues — an issue that management repeatedly alluded to during the company’s third-quarter conference call. It is probably this factor that caused investors to exit their positions. However, the sale appears to have been premature: Chemours is forecasting a strong end to 2021. In fact, it raised its FCF forecast from around $450 million to around $500 million.

But it’s not just the 2021 forecast that suggests Chemours is a smart investment choice. The company’s industry-leading position and track record of success suggests it will be able to weather the current headwinds and thrive into the future.

Currently, shares of Chemours are changing hands around 23% lower than at their 52-week high of $29.82, but there are better indications of the stock’s current low value. For one, Chemours trades at around 5.2 times operating cash flow, which is a discount to the stock’s five-year average multiple of 7.6. And investors who favor the price/earnings indicator will find another demonstration of its advantageous valuation: Chemours is trading at 12.8 times end-of-period earnings, a notable discount to the S&P 500 P/E ratio of 28. ,8.

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Daniel Foelber has no position in any of the stocks mentioned. Lee Samaha has no position in the stocks mentioned. Scott Levine has no position in the stocks mentioned. The Motley Fool owns stock and recommends DocuSign. The Motley Fool recommends the Nasdaq. 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.