Four Stocks Trading at Buy Points

Tuesday, December 3, 2019 4:20 PM | Michael Fowlkes

2019 has been a fantastic year for investors, with each of the major indexes currently trading near their all-time highs. Economic conditions remain favorable, and low unemployment and a record stock market has boosted consumer confidence and spending as we move deeper into the holiday shopping season.

The trade dispute between the U.S. and China continues to dominate the market, with any reports of progress in negotiations driving stocks higher and any sign of a deal falling apart pulling stocks lower again. Both sides have expressed optimism over a possible phase 1 deal before the end of the year but President Trump has also indicated that he is not in any rush to reach a deal which resulted in a dip in the markets.

With so much uncertainty in the market, a lot of investors are concerned about a possible correction in the months ahead, but with major indexes all near-record levels investors also are afraid to sit on the sidelines and miss out on additional upside in the ongoing bull market.

If you want to stay in the market at this time you need to be extra careful to keep your money working in stocks with additional upside potential and trading at low variables. Here are four stocks that are currently trading at low valuations with additional upside potential.

American Express (AXP)

Credit card operator American Express (AXP) has enjoyed strong profit growth in recent years with earnings up 10% per annum over the last ten years. The strong overall economy and low unemployment have boosted consumer confidence and consumer spending, and Americans are carrying a record level of credit card debt. This trend is unlikely to reverse and we are already seeing signs of a strong holiday season which should keep strength in payment processors into the new year. Looking ahead, AXP is forecast to grow profits at 9.8% per annum over the next five years, and the stock trades at a low 14 times pats earnings and just 12.9 times future earnings. AXP is currently priced at $116.26 with an average price target of $133.91. AXP currently offers a 1.5% dividend yield.

Target (TGT)

Mega retailer Target (TGT) is trading at just 18 times future earnings which are forecast to rise at an annual rate of 10.3% per annum over the next five years after rising 10.9% annually over the last five years. Target has done a fantastic job growing its e-commerce business and is seeing dividends from its investments in revamping its stores and shuttering underperforming locations. The company most recently reported earnings on November 20 with numbers topping estimates on both the top and bottom line. Early indications point to a strong holiday shopping season and Target is in a good position to benefit from strong economic conditions and high consumer confidence. TGT has a 2.1% dividend yield. The stock is currently trading at $124.12 with an average price target of $127.53.

U.S. Bancorp (USB)

U.S. Bancorp (USB) is trading just shy of its all-time high after the company posted better than expected third-quarter numbers in October. Despite trading at its record high, the stock remains very attractive at just 13 times future earnings, which are expected to rise at an annual rate of 5% over the next five years. A strong overall economy should continue to boost the financial sector despite falling interest rates. Investor sentiment remains bullish on the financial sector and given USB's low valuation the stock should continue to build on its recent gains. The stock has a 2.8% dividend yield. USB trades at $58.87 and analysts have an average price target of $57.71 on the stock.

General Dynamics (GD)

Aerospace and defense contractor General Dynamics (GD) has traded sideways in the upper end of its 52-week range over the last five months. The company has posted better than expected earnings and sales each of the last four quarters, and profits are up 6.8% annually over the last five years. Looking ahead analysts expect to see General Dynamics grow profits 8.3% per annum over the next five years. Given the GD's recent earnings streak and impressive growth estimates moving forward, there is a good chance that the stock will manage to trade higher into the new year. Analysts remain bullish on the stock and see a lot of upside potential. GD trades at $176.76 with an average price target of $202.25. The stock has a 2.3% dividend yield.

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