Make no mistake about it, there are still a lot of uncertainties in the market, but each seems to be easing a bit. The current earnings season has started strongly, traders are optimistic about trade negotiations between the U.S. and China, and the Federal Reserve has indicated it will boost rates twice in 2019 as opposed to the three rate hikes that it previously anticipated.
The market is cautiously optimistic, and while conditions have improved a lot of big-name stocks have yet to fully recover from their December losses. There are a lot of good values in the market today for investors who have been patiently waiting on the sidelines for conditions to improve, and here are five great bargain stocks to buy you may want to consider if you find yourself with some cash you need to put to work.
Chip maker Intel (INTC) has been stuck in a fairly tight sideways pattern for the last three months. The company recently reported mixed quarterly numbers with better than expected earnings while sales fell a bit shy of the consensus. Just prior to the sales miss the stock was testing resistance at $50 but shares fell after the release and INTC is currently trading at $46.50. The stock has a very low valuation with a forward P/E of just 9.8. Earnings are expected to rise by an annual average rate of 10 percent over the next five years, but with a 15 quarter streak of better than expected profits the forward estimate could be greatly understated.
Investors were turning more bullish on the stock ahead of the report, and if the market is able to show strength INTC stock will likely start to erase its recent losses and move higher as well. Analysts have a bullish price target of $54.27 on the stock.
Drug maker Pfizer (PFE) is currently enjoying a small rally after posting fourth-quarter results that topped estimates on both the top and bottom line. Pfizer was one of the stronger stocks in 2018, but shares pulled back during the market correction in December and continued to show weakness in January leading up to the January 29 earnings report. A big reason for the recent pullback in PFE stock can be attributed to profit taking after the stock enjoyed such strong gains during the second half of last year.
The selling has pulled the valuation down, and PFE stock is now trading at just 10 times earnings and 13 times forward earnings with profits expected to rise at an annual average rate of 7 percent over the next five years. Given the low valuation and strong quarterly report PFE should continue to chip away its recent losses as long as the overall market avoids another major correction. Analysts have an average price target of $45 on the stock.
Walt Disney (DIS)
Entertainment mogul Walt Disney (DIS) looks attractive at this time with shares trading at just 13 times earnings. The company’s pay-tv segment (most notably ESPN) faces a big challenge as more households cut the cord with their cable providers, but the drop in ESPN subscribers is slowing. The company announced that the number of ESPN subscribers fell 2 percent year over year during the fourth-quarter, down from 3% during the same period last year. ESPN remains a problem area for the company, but its other business segments are shining.
The company’s movie studio and amusement parks are doing great, helping the company to grow earnings by 11.8 percent per annum over the last five years. Looking ahead analysts see this growth slowing to an annual average rate of around 5 percent for the next five years. DIS stock is currently trading at just 13 times earnings and will next report on February 5. DIS is currently trading at $110.25 with an average price target of $122.50.
United Technologies (UTX)
Aerospace and defense contractor United Technologies (UTX) hit an all-time high in September before selling off with the overall market during the final part of the year and hitting a 52-week low in late December. UTX stock has already started to rebound, but after the December selloff shares remain at a very low valuation with a forward P/E of just 13.6, and earnings are expected to rise by 8.5 percent per annum over the next five years.
The company reported its most recent set of quarterly numbers January 23 with big beats on both the top and bottom line. The stock should continue to rise following the strong report and analysts have an average price target of $145.88 versus its current price of $117.75.
Off-priced retailer Kohl’s (KSS) is recovering from its December sell off, but the stock still trades at just 11 times earnings and 12 time future earnings. The company reported a strong set of numbers in November with results topping estimates on both the top and bottom line. Kohl’s lifted its full year guidance number, but the upwardly revised number was not as strong as Wall Street wanted to see and the stock began a sell off that was exacerbated by the overall market correction at the end of the year.
Kohl’s will report again March 5 with the consensus calling for quarterly earnings of $2.17 per share versus $1.99 during the same period last year. The lower-than-expected full year guidance has already been priced into the stock, so as long as Kohl’s is able to hit its estimate shares should continue to make back their recent losses. KSS stock trades at $68.91 and analysts have set an average price target of $75.69 on the stock.