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3 Top-Ranked Value Stocks to Buy as Recession Worries Loom
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Inflationary worries have subsided, but unwelcoming news from domestic banking and global situations have clouded investor sentiment. The downgrading of several U.S. banks and commercial lenders by Moody’s and the slowdown of the Chinese economy pose fresh worries for the stock market.
On Aug 7, Moody’s investor services downgraded 10 small and medium-sized lenders and placed six banks on review for potential downgrade due to funding risks and weaker profitability. This has created a widespread panic as it questions the health of U.S. banking and the economic situation.
Such worries are right as investors witnessed a run-on customer deposit during the collapse of Silicon Valley and Signature Bank earlier this year. Aggressive monetary policy tightening by the Federal Reserve to counter inflation has pushed borrowing costs higher, resulting in a slowdown in loan demand for businesses and consumers. This could force the Fed to review its monetary policy and make unwanted decisions even though their inflation target of 2% for the long term is not met.
China, which is also known as the “World’s Factory,” has shown a slowdown in growth. Weakness in the Chinese economy due to lesser demand also signifies the possibility of a recession. Weaker-than-expected exports fell by 14.5% and imports by 12.4% in July from a year ago.
In such a critical situation, prudent investors should park their money in value stocks as they are relatively stable and less volatile due to a matured business model. We have thus identified three top-rated stocks — Bausch Health BHC, Landsea Homes LSEA and Teekay Tankers TNK. These companies sport a Zacks Rank #1 (Strong Buy) each, have a low price-to-earnings ratio (P/E) compared to the S&P 500 Index and have outperformed the index over the past year.
Below, we briefly discuss the stocks:
Bausch Health develops, manufactures and markets a wide array of branded, generic and branded generic pharmaceuticals, over-the-counter products along with medical devices.
Bausch Health has witnessed the Zacks Consensus Estimate for its current-year earnings increasing 7.10% over the last 60 days.
BHC’s has a price-to-earnings ratio (P/E) of 2.66 compared with 21.09 for the S&P 500.
Its shares have gained 57.5% over the past year compared with the S&P 500’s rise of 9.5%.
Landsea Homes is a homebuilding company that designs and builds homes and sustainable master-planned communities.
Landsea Homes has witnessed the Zacks Consensus Estimate for its current-year earnings increasing 13.8% over the last 60 days.
LSEA has a P/E of 11.07 and its shares have gained 67.9% over the past year.
Teekay Tankers provides international marine transportation of crude oil.
Teekay Tankers has witnessed the Zacks Consensus Estimate for its current-year earnings increasing 3.6% over the last 60 days.
TNK has a P/E of 3.20 and its shares have gained 83.1% over the past year.
Teekay Tankers Ltd. (TNK): Free Stock Analysis Report
Bausch Health Cos Inc. (BHC): Free Stock Analysis Report
Landsea Homes Corporation (LSEA): Free Stock Analysis Report
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