Finding Value: Stocks to Consider After a Major Sell-Off
Following a significant sell-off, CNBC Pro set out to identify stocks that are currently trading at deeply discounted levels, presenting potential opportunities for long-term investors. The recent market downturn, fueled by concerns over higher-than-expected interest rate hikes, has impacted stocks across various sectors. The S&P 500 fell below the key 4,300 level for the first time since June, while the Dow Jones Industrial Average recorded its largest one-day loss since March. These declines were prompted by disappointing new home sales and consumer confidence data that fell short of economists' estimates.
Seeking Discounted Stocks with Promising Outlooks
Using the CNBC Pro stock screener tool, stocks were selected based on their current price-to-earnings ratios, which are significantly discounted compared to their 5-year averages. These stocks have experienced losses of at least 5% in the past month, but analysts remain optimistic about their prospects. The consensus rating for these stocks is a buy, with a consensus price target indicating a potential upside of over 10% in the next 12 months.
Opportunities in the Restaurant Industry: Darden Restaurants
Darden Restaurants, the owner of Olive Garden, stands out as a stock trading at a 28% discount compared to its average price-to-earnings ratio over the past five years. Although the stock has lost 15.2% this quarter, it has seen a 2.5% increase in value this year. Despite weak fine dining sales due to consumer pullback, the company reported first-quarter earnings and revenue that exceeded analysts' expectations.
Energy Sector Discounts: Devon Energy, Eversource, and Atmos
Devon Energy, an oil-and-gas producer, holds the highest discount level on the list, at 72%. The stock has faced challenges, including disappointing fourth-quarter earnings and poor cash flow performance. However, Citigroup maintained its buy rating on Devon Energy, even after reducing its price target to $55. In the energy sector, Eversource and Atmos are also trading at significant discounts. Recent increases in oil prices have fueled positive sentiment towards energy stocks.
Other Promising Picks: Home Depot, RTX, and Norfolk Southern
Outside of the energy sector, Home Depot, a leading home improvement retailer, made the list. Aerospace and defense company RTX, as well as railroad operator Norfolk Southern, also present potential opportunities for investors.
As investors navigate the market's latest downturn, these stocks offer attractive valuations and the potential for future growth. However, it is essential to conduct thorough research and consider individual investment goals before making any investment decisions.
Implications of Major Stock Sell-Off for New Business Ventures
In the wake of a significant stock market sell-off, new businesses might find valuable insights from the stocks CNBC Pro has identified as deeply discounted. The market downturn, driven by concerns over higher-than-expected interest rate hikes, has affected stocks across multiple sectors, creating an environment that new businesses should carefully navigate.
Learning from Discounted Stocks
The stocks selected by CNBC Pro, based on their deeply discounted price-to-earnings ratios, offer lessons in resilience and potential growth. Despite experiencing losses in the past month, these stocks are viewed optimistically by analysts, suggesting a potential upside for businesses that can weather short-term market volatility.
Restaurant Industry Resilience: Darden Restaurants
Darden Restaurants, owner of Olive Garden, is a prime example of a stock trading at a significant discount. Despite a quarterly loss, the company has seen an overall increase in value this year. This resilience in the face of weak sales offers a lesson for new businesses in maintaining performance during challenging periods.
Energy Sector Opportunities: Devon Energy, Eversource, and Atmos
In the energy sector, Devon Energy, Eversource, and Atmos are trading at significant discounts. Despite facing challenges, these stocks are viewed positively, particularly with recent increases in oil prices. New businesses in this sector could take note of these trends and the potential for growth amid market downturns.
Other Sectors to Watch: Home Depot, RTX, and Norfolk Southern
Home Depot, RTX, and Norfolk Southern also present potential opportunities, highlighting the importance of diversification across sectors. New businesses can take note of the potential for growth in various sectors, even during market downturns.
In essence, the major stock sell-off and subsequent identification of discounted stocks provide a roadmap for new businesses, underscoring the importance of resilience, potential for growth, and the value of diversification across sectors.
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