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The Market Rally and Bargain Stocks
Cheaper Stocks Outperforming
The market rally has been strong this year, with the S&P 500 and MSCI World index both experiencing significant gains. However, as valuations have risen, there are still some relatively cheap stocks that offer potential upside. CNBC Pro used FactSet to screen for stocks that are cheaper than both indexes and found several with attractive valuations. These stocks have a forward price-to-earnings ratio lower than the S&P 500 and MSCI World index, an average potential upside to the price target of more than 20%, and a buy rating of at least 50%.
Potential Upside in U.S. Stocks
Among U.S. stocks, Delta Airlines stood out with a potential upside of 34% and an 85% buy rating. Despite being in the tech sector, PayPal was the only tech stock that made the list with a forward P/E ratio of 13.5. Disney also made the cut with a slightly lower P/E ratio of 17.8. Wells Fargo predicts that Disney shares may rally on the potential sale of their non-core linear assets.
Global Stocks with Low P/E Ratios
Looking globally, automakers Porsche and Stellantis have the lowest P/E ratios at 3 and 3.5, respectively. These companies offer investors the opportunity for value investing in the automotive sector. French firm Teleperformance showed the highest potential upside from analysts with an average upside of 95% and a strong 81% buy rating. With a price target of 232 euros ($254), Teleperformance offers nearly 75% upside for investors. Analysts predict that Teleperformance will benefit from the implementation of AI and technology in the customer experience industry, leading to a strong second half of the year.
Conclusion: Opportunities for New Businesses in the Market Rally
Riding the Wave of Cheaper Stocks
The current market rally and the presence of bargain stocks present an interesting landscape for new businesses looking to make their mark. While the overall market has experienced significant gains, there are still opportunities for those willing to seek out undervalued stocks with potential upside. This opens up the possibility for new businesses to enter the market and capitalize on these cheaper stocks, setting themselves apart from more established competitors.
Focusing on Untapped Potential in U.S. Stocks
For new businesses in the United States, stocks like Delta Airlines, PayPal, and Disney offer promising potential upside. Delta Airlines stands out with a significant upside and a high buy rating, making it an attractive investment opportunity. PayPal, as the sole tech stock on the list, presents an interesting opportunity for businesses operating in the technology sector. Furthermore, Disney's potential sale of non-core linear assets may create opportunities for new businesses to collaborate or provide innovative solutions in this ever-evolving industry.
Capturing Value in Global Markets
New businesses with a global perspective can explore the value investing potential in global stocks like Porsche, Stellantis, and Teleperformance. The low price-to-earnings ratios of Porsche and Stellantis indicate undervaluation in the automotive sector, offering new businesses a chance to enter or expand within this industry. Furthermore, Teleperformance's high potential upside and positive analyst sentiment suggest that businesses operating in the customer experience industry, especially those leveraging AI and technology, could benefit from the company's predicted strong second half of the year.
In conclusion, the market rally and the availability of bargain stocks create a conducive environment for new businesses to thrive. By strategically identifying and capitalizing on the opportunities presented by cheaper stocks, both in the U.S. and global markets, new businesses can position themselves for success in an evolving and potentially lucrative investment landscape.
Article First Published at: https://www.cnbc.com/2023/07/31/analysts-say-these-us-global-stocks-are-cheaper-than-broader-market.html