3 Large Cap Stocks Under $50 with 50% Upside
The best bang for your buck can be had searching for lower priced stocks of mature, large cap companies that have solid fundamentals.
The recent market slump has put many stocks on sale. In some cases, such as high multiple technology stocks, the recalibration is warranted given the backdrop of rising yields. In other cases, it has made non-tech value stocks even more attractive.
Investors looking to follow the script of ‘buying the dip’ have many choices. The best bang for your buck can be had searching for lower priced stocks of mature, large-cap companies that have solid fundamentals.
Below are three such names. Each trades under $50 per share and according to sell-side analysts has at least 50% upside.
Is Dish Network Stock Undervalued?
Dish Network (NASDAQ: DISH) has rallied 36% this year but there could be much more where that came from. The company behind the DISH and Sling pay-tv brands offers investors an attractive business model. Almost all revenue comes from subscriptions with just a sliver from equipment sales.
In the last couple years, the DISH business has grown to include retail wireless services with the addition of Boost Mobile. Earlier this month Boost Mobile announced a plan to acquire prepaid mobile service provider Gen Mobile which will further expand its customer base into the budget-conscious segment.
Dish is also involved in 5G network deployment, which like mobile phones is expected to be a growth market for the next several years. Dish recently revealed a partnership with IBM to automate its 5G platforms that will make it the first greenfield cloud-native 5G network in the country.
The stock’s slow but steady climb has coincided with five straight quarterly earnings beats. This has been driven by rising consumer interest in Sling TV which lets you stream live TV and on-demand content via the Internet. Look for this trend to continue and combined with an up-and-coming international business drive additional earnings beats.
At 10.6 trailing earnings, Dish Network is one of the least expensive large-cap media stocks. It is a lesser-known way to play the 5G theme while also participating in streaming TV growth. The days of this stock trading under $50 are winding down.
What is the World’s Leading Steel Company?
ArcelorMittal (NYSE: MT) has had an impressive run since March 2020 that has just about erased the steep slide that began in early 2018. The world’s top steel and mining company has the wind at its back heading into 2022 thanks to surging metal prices.
After grinding to a halt a year ago, ArcelorMittal’s steel plants are now fully operational to keep up with demand from the booming automotive, household appliance, and construction industries. A year removed from recording a net loss, earnings per share (EPS) are forecast to surge above $12 this year and stay well above pre-pandemic levels next year.
ArcelorMittal no longer has a U.S. presence after selling its U.S. plants to Cleveland-Cliffs late last year. But with operations in more than 60 countries, it has a well-diversified steelmaking footprint to address global steel demand. The $1.4 billion earned from the Cleveland-Cliffs deal boosted a cash position that has continued to benefit from better steel and iron ore prices. Management opted to reward shareholders with a $2.2 billion stock buyback program which is expected to be completed by year end.
With long-term debt down substantially from a year ago, ArcelorMittal was a much healthier business heading into the back half of the year. It raised its outlook for 2021 global steel consumption from 5% to 8% in anticipation of accelerating demand trends. Low global steel and iron ore inventories should continue to help average selling prices. If these favorable supply-demand dynamics persist, this undervalued stock should climb well into the $40’s by this time next year.
Is Viatris Stock a Buy?
Viatris (NASDAQ: VTRS) is a less talked about drug manufacturer mainly because it has traded on its own for less than a year. The company was formed through a merger of the Upjohn business previously owned by Pfizer and global pharmaceutical player Mylan N.V.
Together the two own an extensive portfolio of commercialized specialty and generic drugs as well as a promising pipeline of candidates. The Upjohn business is focused on branded and generic medicines that are no longer patented protected. As a result, its growth potential is limited but it still serves as a steady source of revenue. Drugs like Celebrex, Lipitor, Lyrica, and Viagra are part of the Upjohn portfolio. Mylan is the growth arm of the business and is best known for Remdesivir, a generic version of Biogen’s Tecfidera, and EpiPen auto-injectors.
Since joining the S&P 500 in November 2020, Viatris shares have trended lower and are currently trading around $14. The last three Wall Street firms to provide an update on the stock have all reached the same conclusion— ‘buy’ and a $23 target price.
Investing in drug companies comes with a unique risk. Whereas most stocks depend heavily on quarterly financial reports, drug makers tend to make their biggest waves through press releases about clinical trail results or FDA approvals. Leaning towards well-established companies with diverse drug portfolios helps mitigate this risk. When it comes to cheap large cap pharmaceutical plays, Viatris has one of the best risk-rewards.