Undervalued stocks for your watchlist

If most stocks appear “overbought” after the strong first half of 2021, investors may want to look at those relatively cheap stocks that are the focus of Wall Street analysts.

The following paragraphs will address three widely monitored investor valuation measures. Shares of the S&P 500 traded below or near its average for the past three years based on the following three standards:

1. Within 5% or below its average price-earnings ratio over the last three years.

2. Within 5% or below its average price-to-cash ratio over the last three years.

3. Within 5% or below its average price-sale ratio in the last three years.

This watchlist filters stocks that Wall Street likes, including names that at least 60 percent of analysts say they buy. Of these shares, those with at least 10% potential for return compared to their average price value for 12 months have been identified.

The list includes several utility shares. American Electric Power, Edison International and NiSource.

As the market potentially enters a new phase with more frequent and larger adjustments, sectors of protection value such as utilities, consumer goods and real estate can benefit.

Valuable stocks are traded at prices that are perceived as relatively cheap based on future profits, sales and cash flow. Protective stocks are stocks that tend to be stable, no matter how the overall market is presented.

Healthcare stocks and their reliable cash flows also occupy several places on the list. Women’s health technology company Hologic, healthcare distributor McKesson Corporation and biopharmaceutical company Vertex Pharmaceuticals are on the list.

Healthcare is an area that is still considered to have some good relative value and some good relative growth. And this is an area where macro factors don’t really play a role.

Technical giant Amazon is also on the list. Retail sales increased by more than 7% in 2021. Comparatively, Big Tech companies such as Facebook and Google Alphabet increased by about 25% and 40%, respectively. But Amazon’s relatively lagging performance this year means investors may see its price as attractive.

Amazon has clearly disrupted the online space and retail space for bricks and mortar and shows no signs of slowing down its quest to dominate the categories, “said Ike Boruchov of Wells Fargo.

 Junior Trader Nikolay Yordanov

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