Value stocks

7 Value Stocks to Buy for Rising Rates

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Some of the terms investors and analysts don’t want to hear at all are bear market, recession, rising interest rates, and high inflation. The stock market is a constant battle between buyers, sellers, bulls and bears. We are undeniably in an era of rising interest rates, and that can be boiled down to one but trivial result, lower valuations for equities.

The yield on US 10-year bonds reached 3.36% as of June 13, 2022, the highest level in the past five years. This means that value stocks are not only a clear choice in a volatile stock market, but a move from stocks to bonds is most likely a move to safety and loss minimization.

For long-term investors, these seven valuable stocks to buy now are a way to invest in undervalued stocks that have the potential to generate very attractive returns when the stock market rallies, even in a bear market. . For reference, the S&P 500 price-to-earnings ratio as of June 13, 2022 was 19.04.

HMLP Höegh LNG partners $8.98
Tender Resolute Forest Products $13.54
BEDU Bright Scholar Education Holdings $0.7887
E Eni $25.44
DDI DoubleDown Interactive $10.10
BCS Barclays $7.99
LAW Adopt assets $21.22

Value Stock to Buy: Höegh LNG Partners (HMLP)

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Höegh LNG partners (NYSE:HMLP) is a company that owns, operates and acquires floating storage and regasification units (FSRUs), liquefied natural gas (LNG) carriers and other LNG infrastructure assets under long-term charters. The company was incorporated in 2014 and is headquartered in Bermuda.

Shares of Höegh LNG Partners are up 108.10% in 2022, but there is too much room for upside potential. The PE ratio (TTM) is 7.34, the stock offers a forward dividend yield of 0.45% and the 1-year target estimate is $11.94, signaling upside potential of nearly 33%.

The Price to Book ratio of 0.41 and the net margin of 42.47% are very bullish.

This is a very stable business as sales have been between $141.26 million and $145.32 million over the past five years. It is also a profitable business and rising energy prices for natural gas are good for the stock as it can generate higher revenue and profitability.

Resolute Forest Products (DP)

A photo of several large rolls of paper in a warehouse.

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Resolute Forest Products (NYSE:Tender) is a company that operates in the forest products industry in the United States, Canada, Mexico and abroad. The company operates through four segments: Market Pulp, Tissue Paper, Wood Products and Paper, was founded in 2077 and is headquartered in Canada.

Shares of Resolute Forest Products are trading at a very low PE ratio (TTM) of 2.53 and have a 1-year valuation target of $23.36, representing a potential gain of 66%.

The price-to-sales ratio of 0.33 and the price-to-book ratio of 0.77 make shares of Resolute Forest Products a value pick.

If you think forest products aren’t as hot as technology, you might want to reconsider. The company increased sales by 30.86% in 2021 and generated net profit growth of 2,970% ss net profit reached $307 million while in 2020 net profit was only $10 million of dollars.

Value Stock to Buy: Bright Scholar Education Holdings (BEDU)

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Bright Scholar Education Holdings (NYSE:BEDU) is not only an attractive value stock, it is also a penny stock and a high dividend stock.

The Company is an education service provider, which operates and provides K-12 schools and supplementary education services in China, Canada, the United States and the United Kingdom. The company was founded in 1994 and is based in China.

Stocks are down nearly 34% in 2022 and the decline can be attributed in part to the crackdown on education services in China. The stock trades at a PE ratio (TTM) of 9.62 offering a very generous forward dividend yield of 16%.

The price-to-book ratio is 0.22 and the company appears to be struggling to generate profits, as in the past two years the company has posted a net loss. On the other hand, the free cash flow trend is strong and positive. In 2021, free cash flow increased by 70.14% to $82.61 million.

Analysts are very bullish on BEDU shares as they have a 1-year estimate target of $3.29. Can the stock offer a return of around 330%? I don’t know, but the high dividend yield is too attractive to ignore and even with a more conservative target there is still plenty of room for a robust rebound in share prices.

Eni (E)

Gate of the ENI refinery in Taranto, Puglia, Italy

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Eni (NYSE:E) is a company engaged in the exploration, development and production of crude oil and natural gas.

It operates through Exploration & Production; global gas and LNG portfolio; Refining & Marketing and Chemicals; Fullness and Power; and the Corporate and Other Activities segments. The company was founded in 1953 and is based in Italy.

Eni shares are almost stable in 2022 despite the massive rise in energy prices. The shares trade at a very low PE (TTM) ratio of 5.16 and they offer a forward dividend yield of 7.16%.

Can the stock reach its 1-year valuation target of $38.23 for a 40% upside? I believe the answer is yes. Price to sales ratio of 0.57 and enterprise value to sales of 0.69 are signals of a cheap stock.

Eni is a profitable company except in 2020 when it recorded a net loss of 8.64 billion dollars. Over the last three consecutive quarters, profitability has been exceptional. The company reported net income of $1.2 billion, $3.82 billion and $3.58 billion for the quarters ending September 30, 2021, December 31, 2021 and March 31, 2022, respectively.

The company also generates a lot of positive free cash flow. A missed rally for this oil and gas company seems like a contrarian game worth watching.

Value Stock to Buy: DoubleDown Interactive (DDI)

A person who plays mobile games and PC games at the same time.

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Switch to the electronic game and multimedia industry, DoubleDown Interactive (NASDAQ:DDI) develops digital games on mobile and web platforms for casual gamers in South Korea. The company was incorporated in 2008.

What makes DoubleDown Interactive a great value stock now? Its Price to Book Ratio of 0.89 and the PE Ratio (TTM) of 6.11 support an attractive valuation.

If you want to beat rising rates and high inflation, the scenario where DDI stock hits its 1-year valuation target of $25 is ideal. The upside potential of 127% would be a phenomenal return. By checking the profitability of the company, investors have many reasons to be confident about the business prospects. The gross margin is 60.21%, the operating margin 27.18% and the net margin 21.51%.

Sales have increased for the past three consecutive years and the company has achieved net profit growth of approximately 45% for each of the past three consecutive years. This is a game company that offers excellent financial results.

Barclays (BCS)

the Barclays logo (BCS)

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Barclays (NYSE:BCS) provides a variety of financial products and services in the UK, Europe, the Americas, Africa, the Middle East and Asia. The company operates through the Barclays UK and Barclays International divisions. Financial services include bank and credit cards, among others. Barclays was founded in 1896 and is headquartered in the UK.

Getting Barclays shares after posting nearly 26% losses in 2022 now makes sense and is justified by fundamentals. Investors can receive a forward dividend yield of 4.13% and be sure they are not paying too much for the earnings outlook, as the stock trades at a PE ratio (TTM) of 4.64.

The price-to-book ratio of 0.55 indicates too cheap a stock.

This bank knows how to make a lot of profits. The net margin of 22.72% and the operating margin of 31.91% prove that this activity will benefit from the rise in interest rates. Banks have their way of earning a bigger margin on the loans they make and the interest they charge their customers when interest rates go up. Betting on this rising bank stock now seems like a fully justified idea.

Value Stock to Buy: Enact Holdings (ACT)

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Adopt assets (NASDAQ:LAW) is a private mortgage insurance company in the United States, founded in 1981 and headquartered in North Carolina. By providing credit protection to mortgage lenders and investors, this company is going through a very busy time right now, as mortgage rates will rise along with interest rates.

ACT stock is another classic example of value investing. The PE ratio (TTM) of 5.89 is very low and the forward dividend yield of 2.46% improves the expected total return.

Revenue growth has increased for three consecutive years and is generating net profits. In 2021, net income grew at a very healthy pace of 47.58% to $546.69 million. The insurance company accumulated positive retained earnings and total equity increased steadily.

This has created shareholder value. Additionally, the price-to-book ratio of 0.82 signals an undervalued stock. If the 1-year estimate target of $26.33 is met, the potential gains are around 23%.

As of the date of publication, Stavros Georgiadis, CFA does not hold (either directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.