Value investing involves picking stocks that appear to be trading lower than their intrinsic or book value. This approach involves looking for undervalued stocks with strong fundamentals and growth potential. By investing in these stocks, investors can achieve significant returns once the market recognizes their true value.
One way to identify value stocks is by comparing a company’s price-to-earnings (P/E) ratio with industry averages or its historical P/E ratios. This ratio compares a company’s stock price to its earnings per share. It must be noted that a lower P/E ratio may indicate that the stock is undervalued. Along with this, we have zeroed in on stocks that have received Strong Buy ratings from Wall Street analysts.
Here are this week’s stocks:
JD.com (JD) – This Chinese e-commerce company provides online retail, logistics, and technology-driven supply chain solutions. Its average price target of $50.13 implies a 14.56% upside potential from the current levels. The company’s P/E of 13.1x is trading at a 30.9% discount to the Consumer Cyclical sector’s median of 18.96.
Celestica (CLS) – This multinational electronics manufacturing services company provides design, engineering, and supply chain solutions. It currently has a P/E ratio of 23.9x, which is down 20% from the Technology sector’s median of 29.8. It has an average price target of $147.50, indicating a 62.18% upside.
Micron (MU) – This semiconductor company provides memory and storage solutions, including DRAM and NAND flash. The stock is trading at 26.1 times earnings, which reflects a discount of 12.4% from the Technology sector’s median of 29.8. Also, the average MU stock price target is $136.33, which implies an upside of 44.51% from current levels.