Since the crash in March 2020, the market’s skyrocketing rally has been primarily driven by growth stocks. As a result, many growth stocks are currently trading at lofty valuations. Though investors are still willing to pay a premium for these stocks, as the continuation of the pandemic-driven trends are expected to keep boosting their revenues and earnings.
However, many market experts are comparing the current conditions with what they witnessed just before the dot-com crash in 2000. So, it could be wise to consider investing in stocks that have time-proven business models that are currently trading at discounts.
Investing in value stocks amid such market conditions has proven to be a successful strategy over the years. Even though value stocks lagged their growth counterparts since the market crash in March 2020, they have delivered solid returns. This is evident from the SPDR Portfolio S&P 500 Value ETF’s (SPYV) 62.5% return since March 23, 2020. Also, according to analysts, mid-cap companies may have more steam left than their large counterparts.
So, I believe stocks such as AGCO Corporation (AGCO), Albertsons Companies, Inc. (ACI), Oshkosh Corporation (OSK), and Penske Automotive Group, Inc. (PAG) good be solid bets right now. These stocks have delivered decent returns over the past year and are well-positioned to keep growing based on their time-proven business models.
AGCO Corporation (AGCO)
AGCO is involved in the design, development, manufacture, and marketing of agriculture machinery. The company’s line of products includes tractors, sprayers, hay tools, and more. AGCO’s stock has gained 77.6% over the past year to close Friday’s trading session at $118.6.
The company’s Valtra Connect offering, which allows farmers and technicians to monitor tractor data remotely, can now also predict the servicing needs of tractors. AGCO has joined the NEVONEX partner network, which is an open digital ecosystem that will help farmers automate workflows and build more efficient processes.
In terms of non-GAAP forward Price/Earnings, AGCO is currently trading at 16.36x, 27.4% lower than the industry average of 22.54x. In terms of forward Price/Sales, AGCO is trading at 0.86x, 45.1% lower than the industry average of 1.57x.
AGCO is expected to see revenue growth of 14.1% for the quarter ending March 31, 2021 and 12% in 2021. The company’s EPS is estimated to grow 29.2% in 2021 and at a rate of 15.6% per annum over the next five years.
AGCO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary ratings system. The POWR Ratings are calculated by taking into account 118 different factors with each factor weighted to an optimal degree.
The stock also has a grade of A for Value. In the 31-stock Agriculture industry, it is ranked #6. For more top stocks in that industry, click here.
In total, we rate AGCO on eight different levels. Beyond what we stated above we also have given AGCO grades for Stability, Quality, Sentiment, Momentum, and Growth. Get all the AGCO ratings here.
Albertsons Companies, Inc. (ACI)
ACI operates as a drug and food retailer in the United States. The company’s stores offer grocery products, general merchandise, pharmaceutical products, healthcare and beauty products, and more. ACI closed Friday’s trading session at $16.49, gaining 6.7% over the past year.
The company has partnered with the federal and state governments to distribute the COVID-19 vaccine through its stores across the United States. The company has launched the United States’ first contactless and automated grocery pick-up kiosk.
In terms of forward Price/Earnings, the stock is currently trading at 5.29x, much lower than the industry average of 30.13x. The stock is trading at a discount in terms of Price/Sales as well (0.11x vs. 1.96x).
ACI’s revenue is estimated to increase 11.3% in 2021. The company’s EPS is expected to rise at a rate of 19.1% per annum over the next five years.
It’s no surprise that ACI has an overall rating of A, which translates to a Strong Buy in our POWR Ratings system. ACI has a grade of A for Value. In the A-rated, 41-stock Grocery/Big Box Retailers industry, it is ranked #5. For other top ranked stocks in that industry, click here.
Click here to see the additional POWR Ratings for ACI (Growth, Quality, Stability, Momentum, and Sentiment).
Oshkosh Corporation (OSK)
OSK designs, develops, and manufactures a broad range of specialty equipment. The company offers fire, emergency, and military vehicles, vehicle bodies, and more. OSK’s stock price has increased 17.8% over the past year and its last closing price was $99.12.
OSK has agreed to make an investment of $25 million in Microvast, a next-generation battery technology company. The investment will help drive future growth for OSK as it leverages the battery technology developed by Microvast.
OSK’s non-GAAP forward Price/Earnings of 17.49x is 22.4% lower than the industry average of 22.54x. The company’s forward Price/Sales of 0.94x is 39.9% lower than the industry average of 1.57x.
OSK’s revenue is expected to grow 4.6% in 2021. The company’s EPS is expected to grow 15.2% in 2021 and at a rate of 18.2% per annum over the next five years.
OSK’s strong fundamentals are reflected in its POWR Ratings. OSK has a grade of A for Value. In the B-rated, 52-stock Auto & Vehicle Manufacturers industry, it is ranked #23. For the top stocks in that industry click here.
Beyond what we stated above, we also have given OSK grades for Growth, Quality, Sentiment, Stability, and Momentum. Get all the OSK ratings here.
Penske Automotive Group, Inc. (PAG)
PAG is a transportation services company that operates automotive and commercial truck dealerships. The company has operations in the United States, Western Europe, Australia, and New Zealand. PAG’s stock has gained 27.6% over the past year to close Friday’s trading session at $66.14.
PAG has recently opened a greenfield used vehicle SuperCenter site in Nottingham, U.K. PAG now operates a total of 17 such SuperCenters for used vehicles. The company has also opened a new Porsche dealership in Washington DC.
PAG’s non-GAAP forward Price/Earnings of 8.81x is 55.5% lower than the industry average of 19.8x. The company’s forward Price/Sales of 0.23x is 82.2% lower than the industry average of 1.36x.
The POWR Ratings are also high on PAG as it has an Overall Rating of B which translates to a Buy. PAG also has a grade of A for Value and a B for Momentum, and Sentiment. In the B-rated, 52-stock Auto & Vehicle Manufacturers industry, it is ranked #9.
Click here to see the additional POWR Ratings for PAG (Growth, Quality, and Stability).
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AGCO shares were trading at $117.82 per share on Wednesday afternoon, up $0.17 (+0.14%). Year-to-date, AGCO has gained 14.44%, versus a 4.46% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaryaman Aashind
Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks. More...
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