While several market ideas have blossomed this year, many are overpriced, which naturally draws eyes to the best value stocks to buy. Here, we’re talking about publicly traded securities that trade at a lower price relative to fundamental metrics, most commonly sales or earnings. Obviously, value investing opportunities entice market participants due to their underlying discount. As humans, we’re geared to respond positively toward bargain offers. Essentially, by targeting must-buy value stocks, we’re receiving far more for our money than would otherwise be possible.
Also, acquiring leading value stocks aligns with a common-sense tactic. If you acquire overheated securities now, there’s a chance that a broader sell off could exponentially cause pain. However, undervalued entities theoretically should mitigate the severity of the pain since they’re already flying under the radar.
On that note, below are top value stocks for August.
Regeneron Pharmaceuticals (REGN)
During the worst of the Covid-19 crisis, Regeneron Pharmaceuticals (NASDAQ:REGN) saw significant interest because of its research and development toward a therapeutic. However, with fading fears of the SARS-CoV-2 virus, REGN lost much of its immediate luster. However, unlike other Covid-related plays, REGN didn’t fall off the map. In fact, it’s still one of the best value stocks to buy.
Financially, Regeneron is trying to restore momentum under a post-pandemic context. In the second quarter of this year, the company posted revenue of $3.16 billion, up 10.5% from the $2.86 billion rung up in the year-ago quarter. Over the past three years, Regeneron printed a three-year revenue growth rate of 23.3%, above 69.58% of its peers.
Right now, the market prices shares at 19.32x forward earnings. In contrast, the sector median stat stands at 27.18x. Finally, analysts peg REGN as a consensus moderate buy. Their average price target lands at $859.88, implying over 9% upside potential.
BHP Group (BHP)
A metals and mining stalwart, BHP Group (NYSE:BHP) arguably makes an excellent case for best value stocks to buy. Currently, so much interest focuses on the hottest flavors of the moment, such as artificial intelligence or electric vehicles. However, relatively few investors concern themselves with entities that physically undergird such innovations. Thus, BHP finds itself down 3% since the Jan. opener.
I suspect this underperformance won’t last too long. Notably, the company features a consistently profitable business, commanding a trailing-year net margin of nearly 46%. This stat ranks higher than almost 94% of enterprises in the metals and mining industry. Also, its return on equity (ROE) stands at a staggering 61.36%, outflanking 98.37% of rivals. Nevertheless, BHP trades at a price/earnings-to-growth ratio of 0.54x, favorably below 62.7% of the competition.
Lastly, analysts peg BHP as a consensus moderate buy. Their average price target comes in at $70.80, implying nearly 19% upside potential. Thus, it’s one of the intriguing value investing opportunities.
Tenaris (TS)
A global manufacturer and supplier of steel pipes and related services, Tenaris (NYSE:TS) might not be a household name. However, it deserves consideration for those seeking the best value stocks to buy. Primarily, Tenaris provides its products and services to the energy industry. Logically, this framework may bode well for TS stock. Recently, CNN reports that are oil prices are rising, thus sparking a rebound in energy enterprises.
However, this year, investors aren’t really paying much attention to Tenaris. Since the January opener, TS only gained less than half-a-percent above parity. Nevertheless, the company easily ranks among must-buy value stocks. From excellent stability in the balance sheet to robust revenue and EBITDA growth to consistent profitability and high margins, Tenaris does it all.
Also, TS trades at a forward multiple of 5.8. As a discount to projected earnings, Tenaris ranks better than 78.55% of the competition. In closing, analysts peg TS as a unanimous strong buy. Their average price target clocks in at $42.56, implying over 26% upside potential.
Arch Resources (ARCH)
At first glance, American coal mining and processing firm Arch Resources (NYSE:ARCH) might seem like one of the best value stocks to buy but only from an ironic sense. Basically, the political and ideological winds favor green this and green that. That’s why we have so much interest in clean-emissions vehicles. Still, the brutal reality is that the underlying power must come from somewhere. In many regions, it’s still coal.
While Arch might not be everyone’s favorite idea for leading value stocks, it still makes a solid case for itself. Right now, the company benefits from a robust balance sheet. It also prints an impressive three-year FCF growth rate of 77.7%, beating out 91.62% of its peers. Nevertheless, ARCH trades at only 3.62x FCF, lower than 81.2% of sector players. Turning to Wall Street, analysts peg ARCH a consensus moderate buy. On average, their price target comes in at $177.50, implying nearly 29% upside potential. Therefore, it could be one of the top value stocks for August.
Taiwan Semiconductor (TSM)
If you’ve been following the news (particularly about the technology sector), you might be pensive about Taiwan Semiconductor (NYSE:TSM). Yes, it might appear to be one of the best value stocks to buy. However, critics might argue that there’s a reason for it. Indeed, recent concerns about fading demand for smartphones and PCs crimped enterprises like Taiwan Semi.
Still, investors might not want to hit the panic button just yet. Since the start of the year, TSM is still up nearly 27%. Further, it enjoys compelling financial stats. For example, the company’s three-year revenue and EBITDA growth rates ping at 28.4% and 32.8%, respectively. Both metrics are well above sector averages. Also, Taiwan Semi continues to be a consistently profitable enterprise.
Despite the top stats, the market prices TSM at only 19.32x forward earnings. In contrast, the sector median stat stands at 25.93x. Looking to the Street, analysts peg TSM a consensus strong buy. Their average price target hits $125, implying 33% upside potential.
Livent (LTHM)
One of the more intriguing ideas for best value stocks to buy, Livent (NYSE:LTHM) specializes in lithium technology. Per its website, the company features a fully integrated product portfolio that mainly serves the EV market. As well, it offers energy storage applications as well as uses such as polymers and synthesis. Not surprisingly, LTHM stock popped up almost 23% since the start of the year. However, in the past month, LTHM gave up 18% of equity value. Questions about the stability of the consumer economy have started to impact sectors like EVs, which may play a role in the volatility. Still, for those who have a long-term mindset, Livent appears tempting.
Financially, the company prints a three-year revenue growth rate of 15%, above 67.33% of its peers. Its net margin also impresses at nearly 39%. Nevertheless, the market prices shares at only 11.19X forward earnings, favorably below 74.17% of the competition. Lastly, analysts peg LTHM as a consensus moderate buy. Their average price target clocks in at $32.19, implying over 38% upside potential.
Encore Wire (WIRE)
Headquartered in McKinney, Texas, Encore Wire (NASDAQ:WIRE) produces high-quality industrial wires and cables. While it might seem like a boring name among best value stocks to buy, that’s what makes Encore appealing. It’s an infrastructure play and as a result, it doesn’t get much airtime. Still, those who know recognize the underlying relevancies. Since the Jan. opener, WIRE stock gained over 25% of equity value.
Despite the robust return, WIRE still makes for one of the must-buy value stocks to consider. For one thing, Encore suffers zero debt, affording it incredible financial flexibility. On the top line, the company prints an impressive three-year revenue growth rate of 36.7%, beating out 93.2% of its peers. Also, its net margin comes in at 20.7%.
Despite these impressive stats, WIRE trades at 5.45x FCF. In sharp contrast, the sector median stat runs at a lofty 24.19x. Finally, D.A. Davidson’s Brent Thielman pegs WIRE a buy with a $240 price target. This implies nearly 44% upside potential.
On the date of publication, Josh Enomoto 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.
