The market rally has been strong this year, but there are still some relatively cheap stocks. The S & P 500 surged about 19% in the year to date. The bulk of those gains came from tech stocks, but the rally has broadened out — the Dow recently snapped a 13-day winning streak broken only on Thursday. As a result, however, valuations have risen, with the S & P 500’s forward price-to-earnings ratio trading at 19.69 as of Friday. Global stocks, too, are soaring: The MSCI World index climbed nearly 17% in the year to date. The index has a forward P/E ratio of around 16 as of Friday. Using FactSet, CNBC Pro screened for stocks that are cheaper than both the indexes. Cheaper stocks The resulting stocks have a forward P/E ratio lower than that of the S & P 500 and the MSCI World index; an average potential upside to price target of more than 20%; and a buy rating of at least 50%. When it comes to U.S stocks, Delta Airlines ‘ potential upside was among the highest at 34%, as was its 85% buy rating. And it has a forward P/E ratio of 6.3 — significantly below the S & P 500’s. PayPal is the only tech stock that showed up. It has a 13.5 forward P/E ratio — on the list’s higher side. Disney also made it to the list, at a marginally lower P/E ratio of 17.8. Earlier in July, Wells Fargo said Disney shares may rally on the back of a potential sale of Disney’s non-core linear assets. As for global stocks, two of the names with the lowest P/E ratios are automakers: Porsche and Stellantis , at 3 and 3.5, respectively. The stock that got the highest potential upside from analysts was French firm Teleperformance , which offers a range of digital business services from customer care to other corporate functions. It got an average upside of 95% and a strong 81% buy rating. Berenberg in a July 17 note said that Teleperformance “is in a strong position to benefit from AI and technology implementation in the [customer experience] industry.” It added the company is set for a strong second half of the year. It gave Teleperformance a price target of 232 euros ($254), or nearly 75% upside.
Source link: https://www.cnbc.com/2023/07/31/analysts-say-these-us-global-stocks-are-cheaper-than-broader-market.html