As an economic recovery in the United States begins to roll, investors are increasingly shifting from remote lifestyle stocks to undervalued candidates that have the potential to rebound significantly as the economy moves into higher gear. The switch to long-overlooked value stocks by investors is expected to continue for the foreseeable future. According to a report…
in Bloomberg, “The global value stock gauge has jumped 22% since Nov. 6, while the equivalent growth index is up just 8%.”
Investors accelerated shift to value stocks is evidenced by the SPDR Portfolio S&P 500 Value ETF’s (SPYV) 4.7% and 10.6% returns over the past month and past three months, respectively. This compares to the SPDR Portfolio S&P 500 Growth ETF’s (SPYG) 3.7% loss and 0.8% gain over the past month and past three months, respectively.
So, we believe it could be wise to invest in fundamentally sound undervalued stocks now before they attract more investor attention. With respect to this, good targets are Cigna Corporation (CI – Get Rating), Koninklijke Philips (PHG – Get Rating), AGCO Corporation (AGCO – Get Rating), and Penske Automotive Group, Inc. (PAG – Get Rating). These names have delivered decent returns over the past year but are still undervalued. The companies have strong business models, which are exposed to a rebounding economy, which suggests that they will advance in the coming months.
Cigna Corporation (CI – Get Rating)
CI sells insurance products and services in the medical, dental, life, and other segments. The company has worldwide operations. CI has gained 71.2% over the past year to close Friday’s trading session at $243.26.
The company recently added Iora Health to its expanding Medicare Advantage network. It recently sold its group life, accident, and disability insurance businesses to New York Life for $6.3 billion.
In terms of non-GAAP forward price/earnings, CI is currently trading at 12.01x, which is 50.36% lower than the industry average 24.19x. In terms of non-GAAP forward price/sales, CI is currently trading at 0.52x, which is 93.58% lower than the industry average 8.04x.
CI’s revenue is expected to increase 5% for the quarter ended March 2021 and 3.6% in 2021. Its EPS is expected to rise 9.8% in 2021 and 10.4% per annum over the next five year.
CI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary ratings system. The POWR Ratings are calculated by considering 118 different factors with the weighting of each optimized to improve overall performance. The POWR Ratings also evaluate stocks by various components such as Value, Momentum, and Quality.
CI has an A grade for Value, and B for Growth and Quality. In the B-rated Medical – Health Insurance industry, it is ranked #1 of 10 stocks.
In total, we rate CI on eight different levels. Beyond what we’ve stated above we have also given CI grades for Sentiment, Stability, and Momentum. Get all the CI ratings here.
Koninklijke Philips (PHG – Get Rating)
PHG is a diverse technology company that is involved in the lighting, healthcare, and consumer well-being sectors. The company conducts business globally. PHG’s stock has returned 73.7% over the past year and closed the last trading session at $57.09.
PHG recently unveiled artificial intelligence (AI)-enabled workflow solutions for diagnostic X-Rays. The company has partnered with the Dutch development bank FMO to expand universal health coverage in Africa.
PHG’s non-GAAP forward price/earnings of 26.07x is 7.78% lower than the industry average 24.19x. Its forward price/sales of 2.22x is 72.44% lower than the industry average 8.04x. And its EPS is expected to grow at a rate of 4.1% every year for the next five years.
It’s no surprise that…
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