Even experienced investors can get sucked in by the fear of missing out (FOMO). This frequently leads to chasing stocks that are trading above their intrinsic value. By contrast, value investing is buying stocks trading for less than their intrinsic value. Finding undervalued value stocks helps you take your emotions out of investment decisions. These stocks frequently have solid fundamentals that present an attractive risk-reward ratio.
For example, value investors frequently target cyclical stocks such as oil and gas stocks. When demand softens, the stock prices of these companies go down. However, if the underlying fundamentals remain the same, these stocks can frequently be good buying opportunities for long-term investors. Buying at the right time can net you share price growth, and you can still capture a dividend while you wait.
As we head deeper into 2024, an attractive set-up is emerging for value investors. No matter what the Federal Reserve does with interest rates, many economists believe the economy will improve in the year’s second half. That means buying undervalued value stocks now can help grow your long-term portfolio. Here are three names to consider.
Albemarle (ALB)
Investing in commodities is volatile by nature. Albemarle (NYSE:ALB) stock surged to an all-time high above $300 a share in January 2023. The expectation was that demand for electric vehicles (EVs) would outpace the ability of lithium producers to deliver.
The opposite occurred, and it has made life difficult for lithium producers. Albemarle specifically issued a public share offering of $1.75 billion to raise capital for constructing and expanding the company’s lithium operations in Australia and China.
However, with ALB stock down more than 50% from its all-time high, this appears to be when patient investors can pick up shares while the fundamentals suggest the stock is undervalued.
Analysts expect Albemarle to grow earnings by 102.6% in the next 12 months. They are also becoming more bullish on ALB stock. The consensus price target of $144.74 represents a more than 15% gain. Plus, 16 of 28 analysts give the stock either a Strong Buy or Buy rating.
When you look at Albemarle’s status as a dividend aristocrat with 29 consecutive years of dividend increases, you can see why ALB stock is one of the leading undervalued value stocks.
HireQuest (HQI)
HireQuest (NASDAQ:HQI) provides temporary staffing solutions that include skilled and semi-skilled workers in various sectors of the economy. The company uses a 100% franchisee-owned business model in which the parent company collects a franchise fee of approximately 6% of each branch’s revenue.
As you would expect, the outlook for HQI stock correlates to the outlook for jobs. The February 2024 Jobs report indicated that 275,000 jobs were created. That’s hardly a weak labor market. However, in the report’s details, temporary staffing jobs dropped by 15,000. This pattern has continued since March 2022, as this sector has shed over 433,000 jobs.
That said, the company’s revenue for the first nine months of 2023 is slightly above the record 2022 pace. Earnings are lighter, a fact that analysts attribute to higher-than-expected workman’s compensation claims.
Analysts have a price target of $23 for HQI stock, which is 83% higher than its price. And you do collect a small dividend with a yield of 1.91%.
Schneider National (SNDR)
Schneider National (NYSE:SNDR) provides surface transportation and logistics solutions in the U.S., Canada and Mexico. SNDR stock is down 13.8% in the last 12 months. That drop-off is even more pronounced from its five-year high of $30.82 hit in July 2023.
Trucking is in a cyclical slump as businesses try to right-size inventory after unwinding supply chains in 2021 and 2022. However, Schneider has weathered the cyclical downturn better than some companies by emphasizing its Schneider Dedicated service. This allows the company to maintain pricing discipline instead of simply chasing volume.
That hasn’t done much for the stock price. However, it should allow the company to come back strong as inventory demand normalizes. Analysts have a $27.09 price target for SNDL stock, and five of six analysts have granted it a Strong Buy rating.
On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
