These are the cheapest stocks in the S&P 500 that could be buying opportunities
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The last two months have been chaotic for Wall Street as big technology giants like Alphabet and Netflix stretch further into bear market territory and the S & P 500 verges on a bear market of its own. Although the market is still volatile, it may be a good time to buy long-term investments looking for low-cost bargains. Oakmark Funds’ Bill Nygren said that there is a wide range of cheap stocks available right now. However, investors don’t get excited when the market drops so they aren’t being flooded by new money. Nygren emphasized that financial stocks as well as energy stocks are being sold at discount prices and encouraged investors not to forget about their asset allocations. General Motors and Ally Financial were two of these names. Searching for cheap stocks To find some of the best possible bargains in the S & P 500, we used FactSet data to search for stocks trading at the heaviest discounts to their historical price-earnings ratios. These stocks have estimated P/Es much lower that their average valuation over the previous five years. Next, we examined these stock options and found those that would grow their earnings per share at least 20% by 2019. These stocks are not only cheap but they also have the potential to grow earnings much more than their peer companies. Then, we chose the names from this list that Wall Street liked with most analysts rating them buy. This is Walt Disney. He’s not the only one who has been affected by the stock market selloff. This stock trades at nearly 29% discount on its valuation. The shares of this entertainment company are down about 34% from the beginning of the year, and they trade at a discount of almost 29%. The company had reported stronger than anticipated subscriber growth, but warned that it is facing slow park recovery in Asia due to Covid-19 lockdowns. In the first quarter, investors and hedge fund managers including Dan Loeb of D1 Capital, as well as Dan Sundheim from D1 Capital, sold their stakes. However, the consensus data from FactSet shows that earnings per share should still rise by around 79%. The technology side, Nvidia, AMD and other semiconductor companies have seen their share of sell-offs due to continuing supply shortages. Nvidia shares and AMD shares fell more than 44% & 35% respectively this year. The list also includes Micron Technology, Western Digital and Qualcomm. Nvidia, AMD and Micron Technology are both trading at steep discounts to historical P-E ratios. The list also includes fast food titans Darden Restaurants (which have fallen 29% and 35% respectively from their peak) and Chipotle Mexican Grill (which has dropped 35% and 39%, respectively). Chipotle reported an improvement in its first quarter earnings. Customers continue to fork out more for the higher prices of their products. They have increased by about 10% over last year. Based on consensus price targets, shares are expected to rise by 27% but have dropped 27% from the beginning of the year. Chipotle and Darden are currently trading at 26.6%, respectively. General Electric, Dollar Tree, and Visa were also on the list.
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