Most value investors are struggling to find undervalued companies to buy.
But hard to find does not mean impossible to find. We have scoured the market for the best value stocks to buy. And we’re going to share those with you today.
The S&P 500 rose by almost 30% in 2019, and global stocks had gained 24%.
Then the coronavirus roared through the United States. It shut down huge parts of the U.S. economy.
Stocks plunged by 40%, and there was a very brief opportunity to put some cash to work at lower prices.
The window did not stay open for long.
In a rare show of political unity, Congress passed stimulus and relief packages that kept people afloat for several months.
The Fed cranked up the printing presses and made money available to keep the economy running to the greatest extent possible.
The Fed also made it very clear that it will be years before we see any hint of higher interest rates.
The stock market loves low rates and liquidity, and the Fed has supplied both in spades. Stocks have roared back and recovered all of the losses from the start of the pandemic here in the United States.
While other investors struggle to find value in the market, these are your best value stocks to buy this week…
BG Staffing
BG Staffing Inc. (NYSE: BGSF) is a staffing company that has three divisions. The Real Estate division provides office and maintenance field talent to various apartment communities and commercial buildings through branches, branch offices and 12 on-site locations in 44 states and the District of Columbia.
The company’s professional division provides staffing for professional businesses like information technology companies, accounting, and financial firms.
Business has slowed down somewhat due to the coronavirus. But for the first six months in 2020, BG Staffing has only seen mid-single-digit declines in revenue.
The company continues to generate significant amounts of free cash flow, and the stock is trading at a very low multiple of those cash flows.
The company has taken measures to support the balance sheet during the crisis. It has slashed the dividend payout and cut costs aggressively.
When we finally have a vaccine or effective treatment plan for the virus, BG Staffing will see business recover fully. The board will reinstate the full dividend payout, and this stock will soar much higher in a very short period of time.
Aegion
Aegion Corp. (NASDAQ: AEGN) is a global infrastructure company that is also a potential bargain stock. The company helps protect infrastructure from corrosion and rehabilitates and maintains aging or deteriorating infrastructure. It also provides construction and maintenance of oil and gas facilities.
While there have been some COVID-related delays and disruptions in their business, Aegion is growing revenue and profits so far in 2020. Operating cash flows are more than four times what they were a year ago, and the backlog of business grew by 4%.
While the outlook for the energy segment is uncertain, Aegion has a large focus on the North American municipal water and wastewater markets that is offsetting some of the energy weakness with double-digit growth so far this year. It focuses on the rehabilitation and maintenance side of the market, and that’s a pandemic-resistant virus. If the pipes need to be repaired, they need to be fixed now, no matter what else is going on in the world.
The stock is trading at a single-digit multiple of free cash flow right now despite outstanding growth prospects for Aegion’s core business. Any recovery in the energy sector will accelerate profit growth and help move the stock even higher.
EnPro
EnPro Industries Inc. (NYSE: NPO) is an industrial machinery company that serves a wide range of industries through two divisions. The Sealing Products Division makes products to seal pipelines used in industries like pharmaceuticals manufacturing, food, beverage production, chemical processing, and other industries.
The Engineered Products division makes bearings and components for large reciprocating compressors used by a wide range of industries.
The pandemic has slowed some segments of EnPro’s business. But it continues to produce large amounts of free cash flow and is in excellent shape financially. Like our other potentially undervalued stocks, EnPro shares are trading a single-digit multiple of the cash being generated by the business.
When the pandemic has passed, the company will again be running at full steam, and the stock price should move dramatically higher.
— Garrett Baldwin
Source: Money Morning