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Top 7 US value stocks to watch in 2018

This text opens a new series of reviews on stocks that are still promising despite being down significantly over the past 6 months, and we’ll start with the US companies.

In order to make the list this week, a company needed to have a market cap of at least $4B and a P/E ratio between 6 and 20, with the decline in share price over the past 6 months not exceeding 40%. This resulted in seven undervalued or moderately valued stocks that are profitable and, in some cases, pay great dividends to investors. Let’s take a closer look at them.

The review is based on data from msn.com/en-us/money/stockscreener.

1. L Brands (Limited Brands)

Victoria’s Secret models

  • Symbol: LB
  • Exchange: NYSE
  • Market cap: $10B
  • P/E ratio: 11
  • Dividend yield: 6.6%
  • 6-month depreciation: –40%

Description: A major Ohio-based fashion retailer, established as Limited Brands Inc. in 1963 and gone public as soon as in 1969. Since the 80s, the company has been mostly known for its flagship brands: Victoria’s Secret (launched in 1977) and Bath & Body Works (launched in 1990). There are also many smaller companies under the L Brands umbrella.

Past performance: After having peaked in 2015, the price of L Brands shares started to decline, falling by three times in less than three years. But now that the company has been posting a significant growth in profits recently, the stock seems to be ready for a new rally, or at least to be nearing the bottom.

Pros: High dividend yield, high potential of a reversal, as indicated by chart patterns and a relatively low P/E ratio.

Cons: No significant disadvantages were found.

2. Pilgrims Pride

Pilgrims Pride chicken farm

  • Symbol: PPC
  • Exchange: NASDAQ
  • Market cap: $4.9B
  • P/E ratio: 7.1
  • Dividend yield: N/A
  • 6-month depreciation: –37%

Description: A multinational food company, currently the largest chicken producer in the United States and Puerto Rico and the second-largest chicken producer in Mexico. The company is a prime supplier of KFC restaurants in the U.S. as well as some other big-name clients, able to process about 36 million birds per week or millions of tonnes of chicken meat yearly.

Past performance: The stock has been quite volatile recently: after hitting an all-time high in late 2014, its share price fell twofold in the next two years, peaking again shortly in 2017. Since the beginning of 2018, the stock has been steadily declining.

Pros: High potential of a reversal, as indicated by the stock being traded at multi-year lows while having low P/E ratio. 

Cons: No dividend payout.

3. Thor Industries

An RV built on the Ford chassis

  • Symbol: THO
  • Exchange: NYSE
  • Market cap: $5.2B
  • P/E ratio: 11
  • Dividend yield: 1.5%
  • 6-month depreciation: –36%

Description: The world’s largest manufacturer of recreational vehicles, including motorhomes, travel trailers, truck campers and more. The company partners with Ford and other industry players, which allows for their chassis and body parts to be used in production.

Past performance: After being fairly stable in 2014–2015, the stock rallied, rising by 2.5 times in the next two years to a new record high. Even after having declined significantly in 2018, the share price is still higher than in 2014–2016.

Pros: High potential of an at least temporary reversal, as indicated by chart patterns and a relatively low P/E ratio.

Cons: No significant disadvantages were found.

4. Acuity Brands

Street and area lighting by Acuity Brands

  • Symbol: AYI
  • Exchange: NYSE
  • Market cap: $5.1B
  • P/E ratio: 15
  • Dividend yield: 0.4%
  • 6-month depreciation: –30%

Description: A manufacturer of lighting equipment, primarily intended for commercial and industrial applications. The company has been on an acquisition spree since the late 2000s, having bought many well-known brands such as Sunoptics, Geometri, DGLogik.

Past performance: The stock has been on a positive price trend since mid-2013. In three years, the share price had risen by 4 times, setting a new record high in 2016, but shortly after the stock started to decline, and by now it’s hard to predict a reversal due to its relatively high P/E ratio.

Pros: While the P/E ratio is too high to be entirely optimistic, the technical indicators suggest the stock is nearing the bottom.

Cons: Extremely low dividend yield.

5. Enbridge Energy Partners LP

Enbridge oil depot terminal

  • Symbol: EEP
  • Exchange: NYSE
  • Market cap: $5.1B
  • P/E ratio: 18
  • Dividend yield: 14.1%
  • 6-month depreciation: –30%

Description: A master limited partnership owned by its general partner, Enbridge Inc., which operates an oil pipeline system in Canada and the United States that exceeds 5,000 kilometers (3,100 mi) in length. Enbridge Energy Partners oversees some 3,000 kilometers of pipelines used to transport crude oil to the major oil refineries in the American Midwest.

Past performance: In the past few years the EEP shares have been on a pronounced negative price trend, partly due to the overall industry crisis. The company, however, remains still highly profitable and pays fairly huge dividends to investors.

Pros: Huge dividend payout.

Cons: Ongoing negative share price trend, the highest P/E ratio in this review (but still acceptable by general standards).

6. DISH Network

A worker mounting a Dish satellite antenna

  • Symbol: DISH
  • Exchange: NASDAQ
  • Market cap: $16B
  • P/E ratio: 8.6
  • Dividend yield: N/A
  • 6-month depreciation: –30%

Description: A Colorado-based television and internet provider, operating a network of 17 satellites to offer its services to an audience of 14 million. In 2014, Dish became one of the first large-scale industry players to start accepting payments in Bitcoin.

Past performance: Since hitting a record high in 2014, DISH share price has declined twofold. Its current P/E ratio, however, is low enough to suggest the stock might be undervalued.

Pros: Low P/E ratio after a long-term decline in share price.

Cons: No dividend payout.

7. Unum Group

Unum headquarters in Chattanooga, Tennessee

  • Symbol: UNM
  • Exchange: NYSE
  • Market cap: $8.7B
  • P/E ratio: 8.4
  • Dividend yield: 2.4%
  • 6-month depreciation: –29%

Description: A Fortune 500 insurance company and one of the oldest industry players in the U.S., established in 1848 as Union Mutual Life. Unum Group is the country’s largest disability insurance provider.

Past performance: The chart for the UNM stock is similar to that of Thor Industries, with the price being flat in 2013–2015 годы, rising in 2016–2017 and falling in 2018, but its low P/E ratio suggests the decline may be over soon.

Pros: Low P/E ratio.

Cons: No significant disadvantages were found.

All information is taken from the stock screener msn.com. The survey in this text is provided to you for informational and analytical purposes only and should not be regarded as an offer or solicitation of an offer to buy or sell any investments or related services that may be referenced here.

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