The stock market has entered a bit of a pullback over the past few weeks. That’s not too surprising, given the vigorous gains that the market enjoyed in the first half of 2023. That said, for investors in momentum stocks, there are still some appealing picks for August 2023.
These three undervalued momentum stocks are still on the upswing. In fact, all of these picks made fresh 52-week highs last week. While the broader indexes may be starting to sag, these three momentum stocks to buy are well-positioned to keep rising in the current economic environment.
Phillips 66 (PSX)
Phillips 66 (NYSE:PSX) is a leading refining and midstream energy company. The company came into its current form in 2012 as a spinoff from oil major ConocoPhillips (NYSE:COP).
Phillips 66 operates in four businesses: midstream, chemicals, refining and marketing. That internal diversification helps make Phillips resilient to weakness in any one particular line of business.
The firm has become much more profitable in recent years thanks to higher profit margins on refining operations. Given the unique dynamics in the international crude oil market, U.S. refiners are enjoying advantageous market conditions and are generating massive earnings.
Traders are waking up to PSX stock; shares are up 27% over the past year. But even after the move, the stock trades for less than eight times forward earnings and offers a healthy 3.6% dividend yield. Famed billionaire Paul Tudor Jones also likes the value proposition of PSX stock, as it is one of his larger positions.
Cboe Global Markets (CBOE)
Cboe Global Markets (BATS:CBOE) is a stock exchange operator and financial products company. The firm is most known for offering its CBOE options exchange. In addition to broad market options, it has specific products, such as its volatility index (VIX).
Cboe is an interesting business due to its counter-cyclicality. That is to say that CBOE stock can benefit when markets hit turbulence. That’s because traders often buy more put options and VIX products when the market is sliding. CBOE is a vendor of market insurance, in one sense, and can profit when markets hit trouble.
As such, it probably shouldn’t be surprising that CBOE stock is rising to new highs now as the stock market entered a bit of a summer slump. Cboe is designed to thrive in nearly all sorts of macroeconomic climates. And, even after its share price increase, CBOE stock goes for just 21 times forward earnings. That’s a good price for a capital-light high profit-margin business such as this.
UBS Group (UBS)
UBS Group (NYSE:UBS) is Switzerland’s leading bank. In addition to its core banking services in that market, it is also a leading wealth management firm that operates globally.
UBS has a tremendous opportunity in 2023. That’s because the firm recently merged with Credit Suisse, greatly expanding UBS’ reach and giving it considerable economies of scale. Assuming merger synergies are achieved as anticipated, UBS will become far more profitable going forward.
Morningstar analyst Johann Scholtz sees excellent upside for UBS with a fair value target of $31.50 per share. That’d make for a solid gain from today’s $23.41 share price. UBS stock recently broke out to new highs, but given the size of the Credit Suisse deal, there is plenty more upside momentum ahead.
On the date of publication, Ian Bezek held a long position in CBOE stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
