Bottom-Fish the Market with These 5 Oversold Stocks
The sell-offs witnessed by the stock market since the beginning of the year have led to a significant correction in quality stocks Pfizer (PFE), Intel (INTC), ArcelorMittal (MT), Bausch Health...
The sell-offs witnessed by the stock market since the beginning of the year have led to a significant correction in quality stocks Pfizer (PFE), Intel (INTC), ArcelorMittal (MT), Bausch Health (BHC), and Macy's (M). So, investors looking to "bottom-fish' in the beaten-down market could add these oversold stocks to their portfolios. Let's discuss.
Recent market volatility has spooked investors, who witnessed wild price swings in their portfolios and unrealized losses. The market correction also means several fundamentally strong stocks have entered oversold territory.
Since the beginning of the year, the major benchmark stock indexes have been experiencing volatility on concerns over the Fed's expected aggressive interest rate hikes this year, Ukraine-Russia tensions, and multi-decade high inflation. However, the recent correction is an excellent opportunity for investors looking to "bottom-fish.' A steady economic recovery and impressive corporate earnings should help the market rebound later this year. According to FactSet, the earnings growth of the S&P 500 for 2022 is estimated at 9%, which is higher than the trailing 10-year average earnings growth rate of 5%.
Given this backdrop, we think it could be wise to invest in oversold stocks Pfizer Inc. (PFE), Intel Corporation (INTC), ArcelorMittal S.A. (MT), Bausch Health Companies Inc. (BHC), and Macy's, Inc. (M), which are well-positioned to rebound in the near term.
Pfizer Inc. (PFE)
New York City-based PFE is a research-based biopharmaceutical company. It is engaged in discovering, developing, manufacturing, marketing, sales, and distributing biopharmaceutical products. The company develops wellness, prevention, treatments, and cures across geographies.
On Nov. 17, 2021, PFE announced the acquisition of Trillium Therapeutics, a clinical-stage immune-oncology company that develops innovative therapies for treating cancer. The acquisition provides PFE with biologics designed to enhance a patient's innate immune system to detect and destroy cancer cells.
PFE's revenues increased 105% year-over-year to $23.83 billion for the fourth quarter, ended December 31, 2021. The company's adjusted net income increased 156% year-over-year to $6.23 billion. Also, its adjusted EPS came in at $1.08, representing an increase of 152% year-over-year.
Analysts expect PFE's EPS and revenue for the quarter ending June 30, 2022, to increase 94.4% and 60.2% year-over-year to $17.96 and $262.58 billion, respectively. The stock has declined 22.5% in price year-to-date to close the last trading session at $45.75.
PFE's POWR Ratings reflect solid prospects. The company has an overall A rating, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Value and a B grade for Growth, Sentiment, and Quality. In the 179-stock Medical – Pharmaceuticals industry, it is ranked #8. Click here to check other ratings of PFE for Momentum and Stability.
Intel Corporation (INTC)
INTC in Santa Clara, Calif., designs, manufactures, and sells essential technologies for the cloud, smart, and connected devices worldwide. The company's segments include the Data Center Group; Internet of Things Group; Mobileye; Non-Volatile Memory Solutions Group; and Programmable Solutions Group.
On December 16, INTC CEO Pat Gelsinger announced the building of a new chip packaging and testing factory in Malaysia, which is set to become operational in 2024. The facility will likely enable the company to capture the rising demand for semiconductor chips worldwide as the application of semiconductor chips grows.
For its fiscal year 2021, INTC's non-GAAP revenue increased 2.4% year-over-year to $74.70 billion. The company's non-GAAP net income increased 3.7% year-over-year to $22.40 billion. Also, its non-GAAP EPS came in at $5.47, up 7.2% year-over-year.
For its fiscal year 2023, INTC's EPS and revenue are expected to increase 5.7% and 3.2%, respectively, year-over-year to $3.73 and $77.73 billion. It surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has declined 9.1% in price year-to-date to close the last trading session at $46.82.
INTC's POWR Ratings reflect solid prospects. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It has an A grade for Value and a B grade for Sentiment and Quality. Within the B-rated Semiconductor & Wireless Chip industry, it is ranked #9 of 97 stocks. To see the other ratings of INTC for Growth, Momentum, and Stability, click here.
ArcelorMittal S.A. (MT)
Luxembourg- based MT is a steel manufacturer and mining company that offers flat, long, and tubular products, that include slabs, hot-rolled coil, cold-rolled coil, and coated steel products. Its principal mining products include iron ore lumps, fines, concentrate pellets, sinter feed, coking and thermal coal, and pulverized coal injections.
On Dec. 9, 2021, MT announced its expanded partnership with carbon capture and re-use specialist LanzaTech through a $30 million investment, demonstrating its focus on emission control initiatives. LanzaTech's gas fermentation technology can reduce CO2 emissions at MT's plant in Ghent, Belgium, by 125,000 tonnes per year.
MT's net sales for its fiscal fourth quarter, ended Dec. 31, 2021, increased 46.6% year-over-year to $20.80 billion. The company's net income attributable to equity holders of the parent increased 235.1% year-over-year to $4.04 billion. Also, its EPS came in at $3.92, representing a 292% increase year-over-year.
Analysts expect MT's EPS and revenue for the quarter ending March 31, 2022, to increase 69.4% and 26.3%, respectively, year-over-year to $3.27 and $20.45 billion. It surpassed the Street's EPS estimates in three of the trailing four quarters. The stock has declined 7.3% in price over the past six months to close the last trading session at $31.50.
MT's POWR Ratings reflect this promising outlook. The stock has an overall A rating, which translates to a Strong Buy in our proprietary rating system.
It has an A grade for Value and a B grade for Growth, Momentum, Sentiment, and Quality. In the A-rated Steel industry, it is ranked #7 of 34 stocks. Click here to see the other rating of MT for Stability.
Note that MT is one of the few stocks handpicked by our Chief Value Strategist, Steve Reitmeister, currently in the POWR Value portfolio. Learn more here.
Bausch Health Companies Inc. (BHC)
BHC in Laval, Canada, is a specialty pharmaceutical and medical device company that develops, manufactures, and markets a range of branded, generic, and branded generic pharmaceuticals, over-the-counter products, and medical devices, which include contact lenses, intraocular lenses, ophthalmic surgical equipment, and aesthetic devices. Its segments include Bausch + Lomb, Salix, Ortho Dermatologics, International Rx, and Diversified Products.
On Feb. 22, 2022, BHC's oral healthcare business, OraPharma, announced the launch of the OraFit custom clear aligner system, which will help correct malocclusion. Chairman and CEO of BHC, Joseph C. Papa, said, "With the availability of OraFit, dental professionals have a new custom aligner option that can easily fit into their patients' daily routines as it aligns their teeth into position with improved comfort due to the gentle, consistent pressure OraFit applies."
For its fiscal year 2021, BHC's total revenues increased 5% year-over-year to $8.43 billion. The company's adjusted EBITDA increased 5.4% year-over-year to $3.47 billion. Also, its adjusted net income came in at $1.60 billion, representing a 12.1% increase year-over-year.
For the quarter ending June 30, 2022, BHC's EPS is expected to increase 13.9% year-over-year to $1.39. Its revenue for its fiscal year 2023 is expected to increase 3% year-over-year to $11.29 billion. The stock has declined 15.1% in price year-to-date to close its last trading session at $23.43.
BHC's POWR Ratings reflect solid prospects. It has an A grade for Value and a B grade for Growth.
Within the Medical – Pharmaceuticals industry, it is ranked #36. To see the other ratings of BHC for Momentum, Stability, Sentiment, and Quality, click here.
Macy's, Inc. (M)
Cincinnati, Ohio-based M is an omnichannel retail company that operates its stores, websites, and mobile applications under three brands: Macy's, Bloomingdale's, and Bluemercury. It sells a range of merchandise for men, women, and kids, including apparel and accessories, cosmetics, home furnishings, and other consumer goods.
On Nov.18, 2021, M announced plans to launch a curated digital marketplace to build on its existing authority as a digitally led omnichannel retailer. The launch is expected to expand the company's assortment in existing categories and brands significantly while introducing a range of new categories. Matt Baer, chief digital and customer officer at M, said, "The market platform will further accelerate our Polaris strategy and unlock new opportunities for sustainable and profitable growth."
M's net sales increased 27.8% year-over-year to $8.66 billion for its fourth fiscal quarter, ended Jan. 31, 2022. The company's adjusted net income increased 194.4% year-over-year to $745 million. In addition, its adjusted EPS came in at $2.45, representing a 206.2% increase year-over-year. Also, its adjusted EBITDA improved 58% year-over-year to $1.24 billion.
Analysts expect M's EPS and revenues for the quarter ending April 30, 2022, to increase 106.5% and 13.7%, respectively, year-over-year to $0.81 and $5.35 billion. It has surpassed the Street's EPS estimates in each of the trailing four quarters. The stock has declined 9.8% in price over the past three months to close the last trading session at $24.53.
M's strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to a Buy in our proprietary rating system.
It has an A grade for Value and Quality and a B grade for Growth. In the A-rated Fashion & Luxury industry, it is ranked #16 out of 66 stocks. Click here to see the additional ratings of M for Momentum, Stability, and Sentiment.
PFE shares fell $45.75 (-100.00%) in premarket trading Wednesday. Year-to-date, PFE has declined -21.93%, versus a -9.47% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master's degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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