With extended lockdowns across major Chinese cities, the continuing Russia-Ukraine conflict, and high inflation, the stock market has remained in correction territory so far this year. Anticipating the Fed’s forthcoming aggressive interest rate hikes, the markets are expected to remain under pressure. According to Michael Howell, chief executive of CrossBorder Capital, another 20% decline is in the offing.
Amid this environment, many investors prefer value stocks over growth stocks. According to a recent MLIV Pulse survey, 74% of readers have stated that cheap stocks relative to their valuation fundamentals might outperform their growth counterparts. Investors’ interest in value stocks is evident from the Vanguard Value Index Fund ETF’s (VTV) 3.1% returns over the past nine months.
Therefore, we believe fundamentally strong value stocks ArcelorMittal S.A. (MT), Bluegreen Vacations Holding Corporation (BVH), and Kronos Worldwide, Inc. (KRO), which are currently trading at discounts to their peers, could be solid bets now.
ArcelorMittal S.A. (MT)
Headquartered in Luxembourg City, Luxembourg, MT, and its subsidiaries operate as integrated steel and mining companies in Europe, North and South America, Asia, and Africa. Its main steel products include semi-finished flat products, semi-finished long products, and seamless and welded pipes and tubes.
On April 14, 2022, MT signed an agreement to acquire 80% shareholding in voestalpine’s world-class Hot Briquetted Iron plant in Corpus Christi, Tex. This is expected to help the company step into future high-quality, sustainable production.
For the fourth quarter, ended Dec. 31, 2021, MT’s sales came in at $20.81 billion, up 46.7% year-over-year. Its net income came in at $4.04 billion, up 235.1% year-over-year. Also, its EPS came in at $3.93, up 289.1% year-over-year.
In terms of forward EV/S, MT’s 0.42x is 73.8% lower than the1.59x industry average. Its 0.34x forward P/S is 73.5% lower than the 1.28x industry average.
MT’s EPS is expected to increase 4.9% to $3.63 for the quarter ending June 30, 2022. The stock surpassed the EPS estimates in three of the trailing four quarters. And over the past three months, it has gained 2.8% in price to close yesterday’s trading session at $29.49.
MT’s POWR Ratings reflect its promising outlook. It has an overall A rating, representing a Strong Buy in our POWR Rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
MT has an A grade for Value and Momentum and a B grade for Growth, Sentiment, and Quality. It is ranked #3 of 33 stocks in the A-rated Steel industry. Click here to see the additional ratings for MT (Stability).
Note that MT is one of the few stocks handpicked by our Chief Value Strategist, Steve Reitmeister, currently in the POWR Value portfolio. Learn more here.
Bluegreen Vacations Holding Corporation (BVH)
BVH in Boca Raton, Fla., operates as a vacation ownership company. It markets and sells vacation ownership interests (VOI); and manages resorts in leisure and urban destinations, including Orlando, Las Vegas, Myrtle Beach, Charleston, New Orleans, and others. Its resort network includes 45 club resorts and 23 club associate resorts.
On March 3, 2022, Alan B. Levan, Chairman and CEO, said, “The demand for resort stays by Bluegreen Vacation Club owners has been strong and we believe our core strategy of primarily offering a ‘drive-to’ network of resorts will continue to serve as a growth driver.”
BVH’s total revenues for its fourth quarter, ended Dec. 31, 2021, came in at $203 million, up 34.2% year-over-year. The company’s net income came in at $13.13 million, up 47.5% year-over-year. And its EPS was $0.63, up 37% year-over-year.
BVH’s revenue is expected to grow 8.3% year-over-year to $819.98 million in 2022. Its EPS is estimated to grow 20.4% year-over-year to $3.36 in 2022. It surpassed the Street’s EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 35.1% in price to close yesterday’s trading session at $26.78.
BVH’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Value and a B grade for Growth, Sentiment, and Quality.
BVH is ranked first of 22 stocks in the Travel - Hotels/Resorts industry. Click here to see BVH ratings for Momentum and Stability.
Kronos Worldwide, Inc. (KRO)
KRO in Dallas, Tex., produces and markets titanium dioxide pigments (TiO2) in Europe, North America, the Asia Pacific, and internationally. The company produces TiO2 in two crystalline forms, rutile and anatase, to impart whiteness, brightness, opacity, and durability.
KRO’s net sales increased 19.5% year-over-year to $496 million in the fourth quarter, ended Dec. 31, 2021. Its net income came in at $31.60 million, up 209.8% year-over-year. And its EPS came in at $0.28, up 211.1% year-over-year.
KRO’s 0.89x forward EV/S is 42.8% lower than the 1.56x industry average. Its 0.85x forward P/S is 36% lower than the 1.33x industry average.
Analysts expect KRO’s revenue to increase 8.6% year-over-year to $2.11 billion in its fiscal year 2022. The company’s EPS is estimated to increase 28.1% per annum in the next five years. Over the past three months, the stock has gained 7% in price to close yesterday’s trading session at $15.45.
It is no surprise that KRO has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Sentiment and a B grade for Value, Stability, and Quality.
KRO is ranked #2 of 89 stocks in the A-rated Chemicals industry. Click here to see KRO’s Growth and Momentum ratings.
Value
What To Do Next?
If you would like to see more top value stocks, then you should check out our free special report:
What makes these stocks great additions to any portfolio?
First, because they are all undervalued companies with exciting upside potential.
But even more important, is that they are all top Buy rated stocks according to our coveted POWR Ratings system. Yes, that same system where top-rated stocks have averaged a +37.99% annual return.
Click below now to see these 7 stellar value stocks with the right stuff to outperform in the coming months.
MT shares were trading at $29.56 per share on Thursday afternoon, up $0.07 (+0.24%). Year-to-date, MT has declined -7.13%, versus a -10.31% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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