Black Friday Market Deals: Bargains Among the Healthiest Businesses |  invest.com

Black Friday Market Deals: Bargains Among the Healthiest Businesses | invest.com

  • The tough market race led to many sales
  • Sorting out bargains from value traps isn’t easy
  • InvestingPro’s Financial Health Score Helps Sort Treasure Trash

2022 appeared to be a long market sell-off. That’s one way of looking at it, anyway. Buying the dip has worked over the past decade, but as inflation, recession, oil shortages, war, covid hangovers have continued to emerge, the dominant theme of the year has been a bear market. Stock prices are lower. A sale, or just a reality check? This is the difficult part.

For that, we have InvestingPro. InvestingPro is our ultimate tool for sorting out the cheap deals from the cheap junk for Black Friday.

InvestingPro focuses on the fundamentals of a company by transparently calculating its upside potential. By highlighting a company’s strength, InvestingPro highlights improving companies that are up for sale. As Warren Buffett says, “Belated recognition of an improving company can give us the opportunity to buy more of a good thing at a bargain price.”

To find these stocks, we use the Financial Health Score, a tool the InvestingPro team has refined to find the best stocks in the market. We use a screen to find the healthiest stocks in the market, which also have a significant upside according to InvestingPro estimates (over 25%). It’s our Black Friday special, brought to you by Mr. Market.

All financial details are as of November 20.

Investing Pro

Tyson Foods

Fair value of Tyson Foods

Fair value of Tyson Foods

Source: InvestingPro

Tyson Foods Inc (NYSE:) is a major food manufacturer, and therefore on the front line of dealing with the effects of inflation from suppliers and benefiting from the effects of inflation with customers. In this climate, the company saw its sales increase by 15.5% in the first 9 months of the year and its earnings per share increased by 60%. And yet, the stock fell 19% as investors worried that growth could slow and margins would come under pressure.

At the same time, the company’s balance sheet is strong – nearly all debt carries an interest rate below 6% – and Tyson is paying down debt, repurchasing stock and increasing its dividend. Although there is some pressure on the consumer and also on some, it seems that the long-term demand for chicken and meat will support Tyson’s position and the portfolios of his investors.

Tyson Foods Financial Health

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Source: InvestingPro

Stellar

Fair value of Stellantis

Fair value of Stellantis

Source: InvestingPro

Stellantis NV (NYSE:), the automotive giant resulting from a merger between FiatChrysler and the PSA Group, has traded at a low multiple since its inception in 2021. And with the expectation of a looming recession, a car manufacturer may not seem appealing.

Financial health of Stellantis

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Source: InvestingPro

There’s a price for everything though, and Stellantis generates free cash flow, pays off debt, and is cheaper than most of its peers despite growing inline or better. With the company developing an increasingly popular range of electric vehicles, it can be a value investment that works.

ArcelorMittal

Fair value of ArcelorMittal

Fair value of ArcelorMittal

Source: InvestingPro

ArcelorMittal SA ADR (NYSE:) is one of the world’s leading steel companies. While infrastructure is booming in the United States and other countries, ArcelorMittal is positioned to thrive in the current environment. It has produced $4.3 billion in free cash flow so far this year despite investing in its working capital (bad for free cash flow) and facing high energy costs in Europe. Even if they were no longer generating free cash flow this year, the company would be trading at 6.4 times this year’s free cash flow.

While a global growth slump would slow ArcelorMittal, its balance sheet is stronger than it has been in a long time. Investors therefore have reasonable downside protection, and the low valuation and the company’s commitment to buy back shares means that the upside is also there if the situation remains stable or even improves a little.

Financial health of ArcelorMittal

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Source: InvestingPro

Antero Resources

Fair value of Antero resources

Fair value of Antero resources

Source: InvestingPro

Our next entry is not for sale, per se. Antero Resources Corp (NYSE:) has been one of the leading pandemic recovery stories and has climbed more than 4700% from its March 2020 lows. It has obviously benefited from a surge in prices over the past past two years, but used the windfall to dramatically improve its balance sheet, paying down more than $1 billion in debt. This then allowed AR to buy back shares.

While commodities are by definition volatile and energy commodities are exposed to potential recession, the growing need for natural gas following the evacuation or exclusion of Russia from the market will continue to act as a tailwind for Antero. It’s a different kind of investment than it was 30 months ago and at 4700%, but it offers an off-the-beaten-path approach to the energy sector, which we’ve re-learned it is still an essential part of a diversified portfolio.

Antero Resources Financial health

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Source: InvestingPro

Albertson

Albertson fair value

Albertson fair value

Source: InvestingPro

As a bonus entry, consider Albertsons Companies (NYSE:). The US grocery chain is interesting because a) InvestingPro considers it healthy enough for a “great performance”, with more than 50% upside, and b) Albertsons has agreed to a buyout deal with Kroger Company (NYSE:). This deal is $27.25 after you deduct the special dividend of $6.85 Albertsons paid to its shareholders, which is up 31%.

There are questions about whether the government agencies tasked with reviewing the mergers will allow the deal to go through due to competition concerns. This may explain why the stock has barely risen since the deal was announced in mid-October. While 31% is hardly a guarantee. At the same time, Albertsons were rumored to be for sale long before this announcement, and the base value could still be a bit higher as well (although the Pro upside is not yet adjusted for this special dividend). The stock could sell off if the deal falls through, but fundamental value and value as an acquisition target make this a special Black Friday.

Financial health of Albertsons

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Source: InvestingPro

***

We’re all trained to look for deals on Black Friday, and in the days and even weeks leading up to it. The market has had a wild ride this year, which means there have been trades along the way. InvestingPro can help you find these deals now and throughout the year.

And for starters, these companies may be the right portfolio additions for your investment this year.

Investing Pro

Disclosure: I have no position in the stocks mentioned.

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