Geopolitcal headwinds sent stocks lower on Friday as US officials confirmed that President Trump’s airstrike killed Iran’s top military commander. The news of the airstrike sent oil prices soaring while the DJIA dropped over 230 points and the S&P 500 closed down over 0.7%.
Despite the backlash felt on equities, the valuation of many stocks still hovers at expensive premiums because of 2019’s historic run. Let’s take a look at a few stocks that trade at a more buyer friendly valuation.
Best Buy BBY has been able to successfully fend off the onslaught of competition from not only other retailers, but from e-commerce giants like Amazon AMZN. The electronics retailer has done this by offering a variety of services like consultation, installation, and technical support. These initiatives have yielded positive results for the firm as Best Buy has boasted positive comparable sales since fiscal 2014.
Best Buy’s Total Tech Support system has also seen success as memberships have increased from 200,000 in May 2018 to 2 million. BBY stock currently trades for about 14X its forward earnings, which is below the S&P 500 average of about 19X forward earnings. Our Q4 consensus estimates call for earnings to rise 1.5% to $2.76 per share while net revenue grows over 2% to $15.1 billion. Best Buy boasts a Zacks Rank #2 (Buy) with a Style Score of A in Value.
Sonic Automotive SAH is a stock that has more than doubled in the past 12 months and looks poised to continue its run in 2020. The company’s EchoPark initiative continued to yield successful results as it generated $312.2 million in revenue in Q3, which represented an increase of roughly 68% from the year ago quarter.
The strong performance its EchoPark business saw in the third quarter prompted management to raise its guidance for EchoPark’s fiscal 2019 total sales to $1.2 billion, which would be a 71% surge. SAH stock currently trades for a little over 10X its forward earnings, which is a solid entry point for a stock that carries momentum from 2019. Our Q4 consensus estimates forecast a top-line rally of 7.4% and a bottom-line hike of 15.8%. Sonic Automotive is listed as a Zacks Rank #1 (Strong Buy) with a Style Score of A in Value.
AbbVie ABBV has actively tried to diversify its product portfolio to better adapt its business to the contemporary pharma market. The company announced in June that it would acquire Allergan AGN, in an effort to diversify its revenue streams. The two companies expect the deal to close in early 2020, which could provide a boost for AbbVie. Allergan can add valuable diversification through its medical aesthetics and botox products.
These added revenue streams would bode well for AbbVie as it weens itself off of Humira, which makes up more than half of its revenue. The dependency AbbVie has on Humira has worried investors as biosimilars have entered the European market and caused a decline in the drug’s sales. These worries have sent the stock to an opportune valuation for investors at about 9.5X its forward earnings. In addition, our Q4 estimates call for a top-line climb of 5.48% and a bottom-line gain of 19.5%. AbbVie currently sports a Zacks Rank #2 (Buy) with a Style Score of A in Growth.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.