10 Undervalued Stocks for 2022
Growth stocks have led the market for the last year, but the undervalued stocks listed below might soon show higher returns. As interest rates continue to climb in 2022, we could see a big move into value stocks. That’s what history tells us is likely.
Whether you’re looking for short- or long-term opportunities, you’ll find them both here. And most of the companies below pay dividends. So you can collect income while waiting for their share prices to climb.
Now, without further ado, here are some of the most undervalued stocks in 2022…
Best Undervalued Stocks for 2022
- CVS Health (NYSE: CVS)
- Cardinal Health (NYSE: CAH)
- AbbVie (NYSE: ABBV)
- Wells Fargo (NYSE: WFC)
- Bank of New York Mellon (NYSE: BK)
- Intel (Nasdaq: INTC)
- IBM (NYSE: IBM)
- Verizon (NYSE: VZ)
- Dish Network (Nasdaq: DISH)
- Kroger (NYSE: KR)
These value stocks come from a wide range of industries. You’ll find companies ranging from biotechs to grocery chains. So buying into a few of them can provide a diversification benefit.
When it comes to value stocks, measuring risk relative to reward is vital. So there were many valuation metrics to consider in making this list…
Why Did These Undervalued Stocks Make the List?
The stock market is near its all-time high. Equity valuations aren’t looking as good compared with historical averages. This makes it hard to find undervalued stocks that are worthwhile.
There are lots of great companies out there, but many of them don’t trade at reasonable prices. In the words of Warren Buffett…
Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.
Keeping this value approach in mind, here are a few of the metrics I looked at to find these companies.
- Price-to-sales (PS)
- Price-to-earnings (PE)
- Forward PE
- Price-to-book (PB)
- Debt-to-equity (DE)
This is just a small sampling of the valuation metrics I considered. It’s also important to note that each industry can have different averages. So I compared these undervalued stocks not only with the overall market but also with their competitors.
Let’s now dive into some company highlights…
Undervalued Company Highlights
CVS Health’s share price has had a nice run over the last year. It’s still well off its all-time high from 2015, though. Looking forward, this healthcare giant has plenty of room to run.
CVS has more than 9,900 retail locations across the U.S. and more than 68,000 retail network pharmacies. This reach has created economies of scale, and as the U.S. population grows older, investors should see higher cash flows.
Wells Fargo stock has had a few rocky years but things seem to be turning around. The financial collapse happened more than a decade ago, and the new financial safety measures are paying off. The Fed’s stimulus is also helping out the financial sector. Wells Fargo cut its dividend in 2020 but will likely return to raising it soon.
Intel has had increased competition, but the chipmaking industry is expanding. There have been chip shortages across the world. Car manufacturers have even had to shut down production due to these constraints.
Intel is making moves to ramp up production. It recently announced that it will build two new factories in Arizona for roughly $20 billion. Intel plans to become a major provider of foundry capacity in the U.S. and Europe to serve customers globally. This is a great move and should reward shareholders for many decades.
Verizon is easily one of the best undervalued stocks in 2022. Warren Buffett – via Berkshire Hathaway – bought shares last year. And the position is among his 10 largest holdings. That’s a strong vote of confidence from one of the world’s best investors.
Verizon is a defensive dividend play. During downturns, its price doesn’t usually drop as much as the broader market. It also pays dividend of more than 4%. That’s hard to pass up in our low-interest-rate world, and it looks safe going forward.
Kroger is another defensive play with a long track record. It’s one of the world’s largest supermarkets and easily clears more than $100 billion in annual sales. Kroger is well positioned to help feed the growing population.
Kroger is also adapting to new consumer trends. It’s now one of the largest organic food companies around. These shifts are helping the company increase its sales and cash flows to reward investors.
Final Thoughts and More Opportunities
We’re seeing a shift from growth stocks to value stocks. And increasing interest rates might speed up the rotation.
The stocks above could see higher returns if that plays out. Even if there’s a delay, investors can collect big dividends along the way. It’s a sound investment approach that many of the world’s best investors use.
The markets are always moving, and the same is true of the best undervalued stocks. So to find the most recent opportunities, consider signing up for Wealth Retirement. It’s a free e-letter that’s packed with insight from investing experts.
About Brian Kehm
Brian Kehm double majored in finance and accounting at Iowa State University. After graduating, he went to work for a cryptocurrency company in Beijing. Upon returning to the U.S., he started working with financial publishers and also passed the CFA exams. When Brian isn’t researching and sharing ideas online, you can usually find him rock climbing or exploring the great outdoors.