By MarketBeat. Originally published at ValueWalk.
These 3 S&P 500 Stocks Could Be Bargains
One of the most common pieces of advice when it comes to investing is to “buy low and sell high”. While this definitely sounds good on paper, finding the right opportunities in the market at the right time is easier said than done. That’s particularly true with all of the volatility and market-moving headlines that have been occurring thus far in 2022. With many companies being completely re-priced thanks to factors like rising interest rates, finding undervalued stocks that you can feel comfortable holding over the long term can be a real challenge.
With that said, there are always some attractive deals to be found in the market if you know where to look. A good starting place is the S&P 500 index, which tracks the performance of 500 large companies listed on stock exchanges in the United States and contains some of the biggest businesses in the world. While not all companies in the index are worthy of your hard-earned capital, a few names stand out as potentially great buys at this time. That’s why we’ve put together the following list of 3 undervalued S&P 500 stocks to buy now.
Let’s take a further look below.
After several quarters of outperformance, semiconductor stocks like Qualcomm have fallen from grace in recent months. Seeing semi stocks get hammered is certainly not a good look for the overall market, as many investors consider this group to be the heartbeat of the tech sector. With that said, long-term investors that are interested in high-quality S&P 500 stocks at reasonable valuations should be very interested in Qualcomm at this time. It’s a company that develops and licenses wireless technology and designs chips for smartphones, which means investors get exposure to some of the most exciting trends in tech.
Whether it’s the Internet of Things, smartphones, or cloud-connected automotive platforms, it’s safe to say that this company is a true innovator. Qualcomm also stands out given how it receives royalty revenue on most of the 3G, 4G, and 5G handsets that are sold today, which means its earnings could continue to grow as more people use smartphones around the world. The company posted Q1 sales of $10.7 billion, up 30% year-over-year, and trades at a reasonable 15.51 P/E ratio at this time, making it a great option for investors that are interested in exposure to tech.
Goldman Sachs (NYSE:GS)
Another potentially undervalued area of the S&P 500 index to look at is the financial sector, which has been facing heavy selling pressure in recent weeks. Goldman Sachs is without a doubt one of the strongest companies to consider in the sector, and with a P/E ratio of 5.4 at this time, shares could be a bargain. It’s a leading investment banking, securities, and investment management firm that offers a variety of services to corporations, financial institutions, governments, and high-net-worth individuals.
The company posted a big year in 2021, which included record net revenues of $59.34 billion, record net earnings of $21.64 billion, and record diluted EPS of $59.45. These numbers speak volumes about the quality of the Goldman Sachs brand and how strong its business model is, and the market share gains the company made last year should lead to continued success. There’s also a lot to like about the 2.49% dividend yield here, which is perfect for income investors. Keep an eye out on how investors react to the company’s Q1 earnings report when it is announced on April 14th.
Home Depot (NYSE:HD)
Investors might have gotten a bit ahead of themselves in bidding up shares of Home Depot to the $400’s at the end of 2021, but with the stock pulling back over 26% year-to-date it could be a great buy-the-dip candidate. Shares are now trading at a discount to the S&P 500 with a 19.77 P/E ratio, and investors that have been interested in adding exposure to the world’s largest home improvement might want to start building a position. Home Depot stands out as a great company for several reasons, including its massive scale that makes it easier to bargain with vendors, a firm commitment to returning capital to shareholders, and loyal customers thanks to low prices.
There’s also a lot to like about how home improvement retailers don’t have to worry about a lot of competition in the e-commerce space, as most homeowners want to buy their goods in person and be able to ask specific questions to employees. Home Depot also reported Q4 EPS of $3.21, up 21% year-over-year, and boosted its dividend by 15%, which are both additional reasons to consider adding shares. Keep in mind that the company faces tough comparisons to last year’s earnings, but that shouldn’t hold you back from owning shares of this fantastic blue-chip stock after the recent selloff.
Before you consider QUALCOMM, you’ll want to hear this.
MarketBeat keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and QUALCOMM wasn’t on the list.
While QUALCOMM currently has a “Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.
Article by Sean Sechler, MarketBeat
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