Investors got a good taste earlier this week of what a market crash could feel like. It is safe to assume most would like to avoid the kind of financial punishment a major crash could bring if we get another budget battle in November and a possible government shutdown. The unrelenting backup on Treasury bond yields has pushed mortgage rates to their highest level since 2000. Due to that, along with credit card debt surging among consumers, things could get a lot worse before they improve.
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One outstanding idea for stock investors, especially those who have not seen all their gains in 2023 dissipate, is to move to low price-to-earnings (PE) value stocks. The BofA Securities Value 10 picks have outperformed the S&P 500 value stocks this year. We screened the list for the lowest PE stocks that also pay a dividend. We found five top companies that equity investors can feel very comfortable with as we move through what could be a very difficult stretch for the stock market.
While all are rated Buy at BofA Securities, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Aflac
Known for the commercial with a howling duck and football legends Deion Sanders and Nick Saban, this is a solid insurance idea trading at just over 10 times earnings. Aflac Inc. (NYSE: AFL) provides supplemental health and life insurance products.
The company’s Aflac Japan segment offers cancer, medical, nursing care income support, GIFT, and whole and term life insurance products, as well as WAYS and child endowment plans under saving type insurance products in Japan.
The Aflac U.S. segment provides cancer, accident, short-term disability, critical illness, hospital indemnity, dental, vision, long-term care and disability and term and whole life insurance products in the United States. It sells its products through sales associates, brokers, independent corporate agencies, individual agencies and affiliated corporate agencies.
The company is also a Dividend Aristocrat and has raised its dividend every year for the past 25 years.
The current dividend yield is 2.23%. The BofA Securities target price Aflac stock is $86, which compares with a $76.00 consensus target and Thursday’s closing share price of $76.44.
Goldman Sachs
This industry leader is a premier stock in the sector for those looking to add financials at a very reasonable price, and it trades at a reasonable 13.7 price-to-earnings. Goldman Sachs Group Inc. (NYSE: GS) has a gigantic institutional equity, debt and derivatives business, an ultra-high net worth clientele, and top investment banking and capital markets expertise, and it continues to be a dominant force around the world in the world of finance.
Its Investment Banking segment provides financial advisory services. These include strategic advisory assignments related to mergers and acquisitions, divestitures, corporate defense activities, restructurings, and spin-offs. The segment offers middle-market lending, relationship lending and acquisition financing, as well as transaction banking services.
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This segment also offers underwriting services, such as equity underwriting for common and preferred stock and convertible and exchangeable securities. And it offers debt underwriting for various types of debt instruments, including investment-grade and high-yield debt, bank and bridge loans and emerging- and growth-market debt.
The Global Markets segment is involved in client execution activities for cash and derivative instruments, credit products, mortgages, currencies, commodities, and equities, as well as provision of equity intermediation and equity financing services. It also offers clearing, settlement and custody services.
Goldman Sachs stock comes with a 3.59% dividend. The $388 BofA Securities target price is higher than the consensus target of $382.18. The stock closed on Thursday at $310.50.
Home Depot
With the potential for a 2024 recession, and skyrocketing interest rates and home prices, people will likely stay put, and this is one of the top retailers to own now. Home Depot Inc. (NYSE: HD), a home improvement retailer, sells various building materials, home improvement products, lawn and garden products and décor products, as well as facilities maintenance, repair and operations products.
The company also offers installation services for flooring, water heaters, baths, garage doors, cabinets, cabinet makeovers, countertops, sheds, furnaces and central air systems, and windows. In addition, it provides tool and equipment rental services. The company primarily serves homeowners. But it also serves professional renovators/remodelers, general contractors, maintenance professionals, property managers, building service contractors and specialty tradesmen, such as electricians, plumbers and painters.
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