2022년 9월 4일 일요일

JPMorgan: Buy these 29 cheap stocks that are seeing 'extreme dislocations' in price and still delivering strong profit growth

 


  • So far, 2022 has been bad for growth stocks as investors flee to safety and value.
  • If the economy begins to improve, these stocks could see a strong comeback.
  • JPMorgan compiled a list of stocks with the best value relative to their growth potential. 

The Federal Reserve's fight to tame inflation and normalize the monetary policies it introduced at the pandemic's start have sent investors fleeing from growth stocks into value stocks and even cash.

Year-to-date, the S&P 500 is down by about 18%, with growth stocks continuing to significantly underperform as the market looks for its bottom. An index of the fastest-growing S&P 500 companies was down by 18% as of Friday, while its value counterpart was down 6%.

Growth stocks outperformed for much of the past decade, when the Fed kept borrowing costs cheap to stimulate the economy. But now, following the Fed's shift, several of these high-growth stocks that have sold off are still extremely cheap relative to their potential, according to a September 1 note from JPMorgan. 

"This correction has pushed some growth stocks to extreme dislocations," said a team of strategists led by Dubravko Lakos-Bujas. As an example, they noted that the fastest-growing stocks are trading at a record 9x price-to-earnings discount relative to the rest of the S&P 500. 

If the tides turn and economic growth improves or the central bank stabilizes or reduces its interest rate hikes, the firm says investors should consider these stocks as part of a balanced portfolio.

Below is a list of 29 stocks from the S&P 500 that JPMorgan says are cheap but have strong growth potential. The so-called growth score is a combination of one-year and three-year growth in sales and free cash flow. The value score is a combination of the price-to-earnings ratio, price-to-sales ratio, and the  firm's market capitalization to its book value.

The stocks are ranked starting with the highest average growth-at-reasonable-price rating (GARP).

1. NRG Energy

NRG
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Ticker: NRG

Sector: Utilities

Score: 3.0

2. Lincoln National Corporation

LNC
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Ticker: LNC

Sector: Financials

Score: 3.0

3. Archer-Daniels

ADM
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Ticker: ADM

Sector: Staples

Score: 2.9

4. Western Digital Corp

WDC
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Ticker: WDC

Sector: Technology

Score: 2.7

5. Alaska Air Group

ALK
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Ticker: ALK

Sector: Industrials

Score: 2.6

6. Pfizer Inc

PFE
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Ticker: PFE

Sector: Health Care

Score: 2.5

7. Micron Technology Inc.

MU
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Ticker: MU

Sector: Technology

Score: 2.4

8. Advanced Micro Devices, Inc.

AMD
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Ticker: AMD

Sector: Technology

Score: 2.3

9. Hewlett Packard Enterprise Company

HPE
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Ticker: HPE

Sector: Technology

Score: 2.3

10. Viatris Inc

VTRS
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Ticker: VTRS

Sector: Health Care

Score: 2.3

11. DXC Technology Co

DXC
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Ticker: DXC

Sector: Technology

Score: 2.3

12. FedEx Corporation

FDX
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Ticker: FDX

Sector: Industrials

Score: 2.3

13. Moderna Inc

MRNA
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Ticker: MRNA

Sector: Health Care

Score: 2.2

14. Delta Air Lines, Inc.

DAL
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Ticker: DAL

Sector: Industrials

Score: 2.1

15. Weyerhaeuser Co

WY
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Ticker: WY

Sector: Real Estate

Score: 2.1

16. CBRE Group Inc.

CBRE
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Ticker: CBRE

Sector: Real Estate

Score: 2.1

17. Lennar Corporation

LEN
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Ticker: LEN

Sector: Discretionary

Score: 2.1

18. Centene Corporation

CNC
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Ticker: CNC

Sector: Health Care

Score: 2.1

19. Expeditors International of Washington Inc.

EXPD
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Ticker: EXPD

Sector: Industrials

Score: 2.0

20. MGM Resorts International

MGM
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Ticker: MGM

Sector: Discretionary

Score: 2.0

21. Nucor Corporation

NUE
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Ticker: NUE

Sector: Materials

Score: 2.0

22. PulteGroup, Inc.

PHM
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Ticker: PHM

Sector: Discretionary

Score: 1.9

23. United Airlines Holdings Inc

UAL
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Ticker: UAL

Sector: Industrials

Score: 1.9

24. LyondellBasell Industries N.V.

LYB
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Ticker: LYB

Sector: Materials

Score: 1.9

25. Franklin Resources, Inc.

BEN
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Ticker: BEN

Sector: Financials

Score: 1.9

26. Kroger Company

KR
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Ticker: KR

Sector: Staples

Score: 1.8

27. Regeneron Pharmaceuticals, Inc

REGN
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Ticker: REGN

Sector: Health Care

Score: 1.8

28. Edison International

EIX
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Ticker: EIX

Sector: Utilities

Score: 1.8

29. Live Nation Entertainment, Inc.

LYV
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Ticker: LYV

Sector: Comm. Services

Score: 1.7

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