Numerous investors spend hours attempting to discover stocks on the equity securities market that are selling at a discount. Why? Because undervalued stocks possess the tendency to outperform the market, as well as their specific industry, over a longer period of time.
Large-cap stocks are also known to be less volatile because of their usually dominant share of the industry. Luckily, we can utilize the Zacks Stock Screener in order to search for the typical criteria that would represent a large-cap undervalued stock.
While undervalued, large-cap stocks will most likely not double within the next year, the can represent a sustainable, yet profitable longer term investment. Check out these 4 undervalued large-cap stocks to buy now:
1. Citizens Financial Group, Inc. CFG
Citizens Financial Group, Inc. is a retail bank holding company that offers a range of commercial and banking services to individuals, small businesses, and more. Citizens Financial holds a “B” grade for Value and “A” grade for Momentum, which means that the stock is considered undervalued and its share price has continued to increase over time.
The company pays a strong 1.51% dividend and has repurchased $850 million worth of shares in an effort to reward its shareholders. Further, the company’s debt/equity and dividend payout ratios compare favorably with the industry, indicating that the company’s capital structure and strategies are strong and sustainable.
Citizens Financial Group has also been reliable to its shareholders, as the firm has defeated its earnings projections in each of its past ten operational quarters. Additionally, the company has shown multiple hints that it is selling at a discount. For example, the company’s cash flow per share of $3.01 and P/E ratio of 15.01 tower over the industry averages of $1.21 and 18.08, respectively. Also, the company holds an earnings yield of 6.64%, and the stock was recently promoted to a Zacks Rank #1 (Strong Buy).
2. Delta Air Lines, Inc. DAL
Delta is America’s fastest growing international carrier, and it offers customers service to more destinations than any global airline. Delta pays a strong dividend of 1.48% and has just employed an initiative share repurchase program worth $5 billion. Delta’s passenger revenue per available seat miles (PRASM) increased 3.5% on a year by year basis in May 2017, and the stock features an “A” rating in Value, which means that the firm is believed to currently be selling at a discount.
As of 60 days ago, Delta’s full-year EPS estimates increased by 5.49% to an impressive $5.38. Delta has also shown the typical traits of an undervalued stock with a strong EV/EBITDA of 5.14 and P/E ratio of 10.20, both of which compare favorably to its industry averages. Additionally, the company holds a price/sales ratio of 0.99, another solid valuation metric. Delta currently sports a Zacks Rank #1 (Strong Buy).
3. Volkswagen AG VLKAY
Volkswagen is the largest automobile manufacturer in Europe. Its activities focus on the automotive market, and it offers products and services along the entire automotive value chain. Volkswagen is part of the foreign automotive industry, which ranks in the top 5% on the Zacks Industry Rank. Also, the company features “A” grades for Value and Momentum, which means that the company is believed to be undervalued and its share price has continued to skyrocket. As of 60 days ago, Volkswagen’s full-year EPS estimates increased by a whopping 25.31% to 5.05%.
Volkswagen holds many typical qualities of an undervalued company. For example, the firm owns a phenomenal EV/EBITDA of 1.09 and PEG ratio of 0.36. Additionally, Volkswagen holds a cash flow per share of $11.45, which compares to the industry average of $5.81. In essence, the company is utilizing shareholders equity more efficiently than its closest competitors. Finally, Volkswagen features an impressive price/book ratio of 0.78. Volkswagen currently sports a Zacks Rank #1 (Strong Buy).
4. H&R Block, Inc. HRB
H&R Block Inc. is a diversified company involved in tax return preparation, electronic filing of incoming tax returns, and other tax-related services. The company features a solid dividend of 3.06%, but only a beta of 0.54, which means that the stock is considered less volatile than the average security. Additionally, H&R Block sports “A” grades for Value and Growth, which means that the company is considered undervalued, but exhibits excellent future growth prospects.
H&R Block holds an impressive cash/price of 36.28 and P/E ratio if 15.70, both of which compare favorably to the industry averages of 8.39 and 23.38, respectively. Also, the company holds an impressive EV/EBITDA of 7.59, which beats the industry average of 10.12. Basically, H&R Block has exhibited many typical traits of an undervalued company on the market. H&R Block currently possesses a Zacks Rank #1 (Strong Buy).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.