2024-01-06 00:01:48
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In his latest stock market outlook, Dave Sekera, U.S. market strategist at Morningstar, says that after rebounding in 2023, growth-oriented stocks appear overvalued today. So he suggests investors go underweight them heading into the new year and instead invest in value-oriented stocks, where he sees more opportunity.
Three of the Best Stocks to Buy Today for Value-Style Investors
So we present to you three of the best cheap value stocks to buy today. These titles have several things in common. First, they all fall into the “Value” box of the Morningstar Style Matrix. They also come from companies that benefit from a strong economic moat Morningstar, which means that we believe these companies have sustainable competitive advantages. Finally, all three of these stocks are trading well below Morningstar’s fair value estimates.
1. Medtronic (MDT)
2. Comcast (CMCSA)
3. RTX (RTX)
The first name on our list of cheap value stocks to buy is Medtronic (MDT). Medtronic is the largest medical device manufacturer in the United States. With a diverse portfolio of products across a wide range of chronic diseases, the company is a key partner for its hospital customers. Medtronic recently received regulatory approval for several emerging technologies that we view as key growth drivers for the future. We also like that management is pruning its portfolio to drive growth. We think its stock is worth US$112, and it’s trading well below that price.
The second cheap title on our list is Comcast (CMCSA). We expect only modest revenue growth for Comcast over the next few years: the decline in the company’s traditional TV business far outweighs its modest customer gains in broadband, adoption of its Peacock streaming service and in the expansion of its theme parks. Our primary assumption is that Comcast will maintain its position as the dominant Internet service provider in most of the markets it serves, providing a solid foundation for developing customer relationships and providing strong locking power. prices over the coming years. We estimate the fair value of the stock at US$60.
The last name on our list of cheap stocks to buy is RTX (RTX). This diversified aerospace and defense company consists of three segments: Collins Aerospace, Pratt & Whitney and Raytheon. Concerns about the costs of inspecting and replacing critical parts on more than a thousand Pratt & Whitney engines have weighed on RTX’s stock this year, but we believe the company can weather the financial impact with to profitable and growing activities. We believe RTX will benefit in the long term from growth in aerospace and increased defense budgets. We estimate the value of RTX stock at US$112.
A text by Susan Dziubinski for Morningstar
(Director Michael Hodel, Principal Analyst Debbie Wang and Morningstar Analyst Nicolas Owens provided research for this segment.)
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