Fundamentally, the narrative for value stocks to buy in Jan. (or any other month) sells itself. Even the wealthiest among us find great deals attractive. Indeed, it takes a special kind of person to deliberately acquire something that’s overvalued for no good reason. As well, the wild market volatility in 2022 brings to the table amazing opportunities regarding value stocks to buy. Sure, no one likes seeing red ink in their portfolio. However, with a little bit of patience, less-appreciated ideas can potentially blossom.
However, anytime this subject materializes, it begs the question: undervalued by whom or by what standard? To address this uncertainty, the value stocks to buy below all feature rock-solid financials. And for our purposes, these ideas are objectively undervalued relative to trailing 12-month sales. So with that out of the way, below are the value picks you should potentially consider.
|REX||REX American Resources||$30.38|
|TROW||T. Rowe Price||$112.29|
Thor Industries (THO)
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On paper, Thor Industries (NYSE:THO) doesn’t exactly strike investors as one of the value stocks to buy. While the recreational vehicle specialist garnered intense demand during the worst of the coronavirus pandemic, society has since largely normalized it. Therefore, the social-distancing vacation no longer carries the appeal that it once did. Plus, there’s the matter of the trailing one-year performance of a loss of over 26%. Apparently, most investors don’t have much confidence in THO stock. Still, for those seeking objective value, Thor Industries may be worth a look.
Currently, the market prices THO at 0.27 times sales. For comparison, the sector median stands at 0.75 times. Also, Wall Street prices Thor at 4.2 times TTM earnings, which sits nearly 94% below industry players. To be fair, of the two analysts covering THO, the consensus rates as a hold – not exactly encouraging. However, hedge funds recently started bidding up shares, making Thor one of the value stocks to buy.
Another name that doesn’t quite strike investors as one of the value stocks to buy, MarineMax (NYSE:HZO) specializes in selling boats and other watersports-related vehicles. Here’s the problem. With consumer sentiment in the toilet, few people are rushing to buy what are effectively money pits. It also doesn’t help that in the trailing year, HZO gave up 45% of equity value.
Narrative-wise, MarineMax presents high risks, especially if you’re concerned about a possible incoming recession. I could be wrong but recessions and boats don’t usually mix. Then again, MarineMax’s core clients may be much more insulated from economic pressures. You’ve got to have plenty of discretionary income to be in the boating space.
Further, as it relates to value stocks to buy, HZO presents an undeniably objective case. Currently, the market prices MarineMax at 0.31 times sales, below the sector median of 0.68 times. As well, HZO features a price of 0.88-times book. In contrast, the sector price-to-book ratio stands at 1.49 times.
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Headquartered in Seoul, South Korea, Gravity (NASDAQ:GRVY) is a video game company. Per its public profile, the company garnered attention for its multiplayer online role-playing game Ragnarok Online. Apparently, it’s one of the more popular titles out there. Unfortunately, such a status did not exempt GRVY from volatility. In the trailing year, shares gave up nearly 43% of equity value.
However, with the red ink comes a potentially compelling discount. According to Gurufocus.com, GRVY represents one of the most underappreciated names among value stocks to buy. Currently, the market prices GRVY at 0.91 times sales. In contrast, the sector median pings at 2.48 times. Also, it trades for 1.26 times the book value, compared to the sector median of 2 times.
In addition, Wall Street pegs Gravity shares at just under 7 times TTM earnings. That puts the company favorably lower than 85% of the competition. If you need more convincing, please note that Gravity features zero debt, affording it flexibility during these uncertain times.
Cognizant Technology (CTSH)
Based in Teaneck, New Jersey, Cognizant Technology Solutions (NASDAQ:CTSH) is a multinational information technology services and consulting firm. Although providing a relevant profile for the broader business ecosystem, Cognizant couldn’t appease the market gods. In the trailing year, CTSH crumbled quite badly, giving up nearly 35% of its equity value. To be fair, though, shares did gain almost 2% in the past five days.
Perhaps, investors at large may be sensing that CTSH ranks among the value stocks to buy. Right now, the market prices Cognizant at 1.55 times sales. For comparison, the underlying sector median stands at 2.3 times. Also, Cognizant’s price relative to free cash flow pings at 12.6 times. This equates to the company coming in roughly 73% below the competition.
Notably, Cognizant enjoys a strong balance sheet, featuring an Altman Z-Score of 6.28, reflecting low bankruptcy risk. Moreover, the IT firm’s return on equity stands just under 20%, beating out 84% of its rivals. This stat also reflects a very high-quality business, making CTSH one of the value stocks to buy.
Jerash Holdings (JRSH)
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An apparel-manufacturing firm, Jerash Holdings (NASDAQ:JRSH) admittedly presents risks. Again, with the consumer economy sliding, it may be tougher for households to pony up for discretionary goods. However, Jerash does have the advantage of partnering with some of the world’s top brands. These include globally recognized luxury players.
Unfortunately, from a technical perspective, JRSH consistently suffered throughout 2022. In the trailing year, shares tumbled by more than 39%. That said, it does ping as one of the more dependable value stocks to buy. Primarily, that’s because of the company’s balance sheet. With a cash-to-debt ratio of slightly over 10 times, Jerash faces economic uncertainties with a strong war chest.
Regarding valuation metrics, the market prices JRSH at 0.35 times, below nearly 75% of apparel competitors. Also, JRSH trades at 0.69 times its tangible book value. In contrast, the sector median is 1.2 times. Finally, the company’s price-earnings ratio pings at 9.7 times, below the industry median of 13.7 times.
REX American Resources (REX)
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Operating out of Dayton, Ohio, REX American Resources (NYSE:REX) is a producer and retailer of ethanol, distillers grains, and natural gas as well as a holding company in energy entities. Fundamentally, the recent rush for critical commodities boosted the relevance for REX American. In turn, the trailing-year performance for REX shares came out to 10% below parity.
By any other standard, that’s not good at all. However, with the benchmark equities index slipping 19% during the same period because of extraordinary headwinds, REX gets some respect. Moving onto the subject at hand – value stocks to buy – REX makes an intriguing case. For one thing, you wouldn’t just be acquiring a discount for its own sake. On the balance sheet, the company enjoys a cash-to-debt ratio of 19.6 times. That’s better than over 83% of its peers.
Presently, the market prices REX at 0.6 times sales, well below the sector median of 1.32 times. As well, REX trades at 1.18 times tangible book, coming in lower than nearly 70% of the industry.
T. Rowe Price (TROW)
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Perhaps the riskiest idea within this list of value stocks to buy, T. Rowe Price (NASDAQ:TROW) represents a global investment management firm that offers funds, sub-advisory services, separate account management, and retirement plans and services for individuals, institutions, and financial intermediaries.
To be sure, investor sentiment broadly faces challenges because of the deflationary forces affecting the equities sector. Not surprisingly, in the trailing year, TROW stock gave up 43% of its equity value, a steep loss. Nevertheless, an argument can be made that deflationary markets provide an opportunity for distinction. After all, anybody can pick stocks in a decisively bullish market cycle.
At the moment, Wall Street prices TROW at 3.6 times sales, well below the sector median of 6.1 times. Also, TROW trades hands at 9.43 times FCF, below more than 63% of its rivals. Finally, prospective investors have confidence in a solid balance sheet. Per Gurufocus.com, T. Rowe Price’s Altman Z-Score stands at 9, reflecting very low bankruptcy risk.
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.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.