With the S&P 500 having dropped 19% year to date, you might be thinking now is the time to pick up some bargain stocks.
If so, perhaps have a look at this list from Morningstar. About half the stocks tracked by Morningstar analysts traded below their fair-value estimates as of Dec. 14.
Here are the 10 most undervalued stocks as of that date, starting with the most overvalued. The figures shown are from Dec. 21.
Keep in mind that just because a stock is cheap doesn’t mean it’s one you should own. So research the fundamentals of these -- and any -- stocks you contemplate buying.
I-Mab Biopharma (IMAB), a Chinese biotechnology company. Morningstar fair-value estimate: $32.50. Recent price: $3.66.
Altice USA (ATUS), a broadband/TV provider. Fair-value estimate: $19. Recent price: $4.15.
Lyft (LYFT). Fair-value estimate: $55. Recent price: $10.65.
Farfetch (FTCH), an online luxury goods store. Fair-value estimate: $18.70. Recent price: $3.85.
Groupon (GRPN). Fair-value estimate: $27. Recent price: $7.30.
Tilray Brands (TLRY), a Canadian cannabis producer. Fair-value estimate: $12. Recent price: $2.90.
Hanesbrands (HBI), the apparel company. Fair-value estimate: $22. Recent price: $5.95.
WW International (WW), which includes Weight Watchers. Fair-value estimate: $12.20. Recent price: $3.85.
Nissan Motor (NSANY) . Fair-value estimate: $21. Recent price: $6.30.
SoFi Technologies (SOFI), an online lender. Fair-value estimate: $14.50. Recent price: $4.70.
Morningstar analysts gave only three of the stocks a moat (durable competitive advantage). Each of the trio received narrow moats.
Altice: “The company continued to struggle during the third quarter, reporting poor customer losses, weak revenue per customer, and soft margins,” Morningstar analyst Michael Hodel wrote Nov. 2.
“On the brighter side, the firm’s network upgrade effort has accelerated nicely, and management indicated that it has seen signs of a turnaround thus far during the fourth quarter.”
Lyft: “While Lyft’s mixed third-quarter results and fourth-quarter guidance were disappointing, we continue to see strength in the firm’s network effect, which has driven growth in rider monetization,” wrote Morningstar analyst Ali Mogharabi.
“We were also pleased with Lyft’s latest cost-cutting measures. However, we continue to expect lower 2024 adjusted [earnings before interest, taxes, depreciation and amortization] than the firm guided for earlier this year.”
Hanesbrands: “It is the market leader in basic innerwear in multiple countries,” wrote Morningstar analyst David Swartz. “We believe its key innerwear brands like Hanes and Bonds in Australia achieve premium pricing.”
Further, “while the firm faces challenges from inflation, the strong dollar, lower inventory retailers, and covid, we think Hanes's share leadership in replenishment apparel categories puts it in better shape than some competitors,” he said.
