Investing provides significant opportunity of growing wealth over the course of time. Value investing has been categorised as one of the popular strategies which professional investors tend to leverage with strong success to fetch solid returns in investment world. This strategy focuses on most undervalued stocks and entering into positions when they are about to see a strong rally. In the world of value investing, focus has always been on scrips which trade below intrinsic value. As a result, investors concentrate on stocks with share prices much lower than actual worth. These stocks can result in strong gains whenever the investing community realizes their value and when they start taking positions. Therefore, best value stocks to buy will be the ones which are trading below their intrinsic values and which have strong fundamentals.
While value investing has a potential to provide significant returns, all the discussions ends at the holding period of such stocks. This is because best value stocks to buy will not explode overnight and provide mind blowing returns in one go. Therefore, all the legendary investors emphasise on the patience regarding holding period of such stocks.
As we head into 2024, the valuation levels are now out of proportion post this strong rally for 2H of 2023. At the present levels, several stocks look overvalued post Nasdaq 100 increased by ~38% and S&P 500 saw an increase of ~21%. While there are companies such as NVIDIA Corporation, Apple Inc, etc. which continue to trade at premium valuations post their strong performances in 2023, there are still some hidden gems which continue to trade at discounted valuations.
With this in mind, we will now have a look at best value stocks to buy for 2024.
1. General Mills, Inc.
The company is a leading global packaged food company, which focuses on producing snacks, cereal, convenient meals, yogurt, dough, etc.
It has released its 2Q24 financial results, with net sales coming at $5.1 billion, which were down by 2%, and organic net sales too declined by 2%. On 2-year compound growth basis, the company’s net sales saw an increase of 1% and organic net sales went up by 4%. Operating profit of the company came in at $812 million, exhibiting a rise of 2% and adjusted operating profit was $989 million, which went up by 13% in constant currency.
While the company saw slower-than-anticipated volume recovery in 2Q as a result of challenging consumer landscape, it saw bottom-line growth mainly because of strong HMM cost savings.
It contains to adapt its plans to evolving consumer environment and the company remains focused on supporting long-term growth. Gross margin of the company saw an increase of 170 basis points to reach 34.4% of net sales as a result of HMM cost savings and positive net price realization and mix. This was partially offset by the input cost inflation, increased other supply chain costs, and deleverage of supply chain.
Operating profit of the company was supported by increased gross profit dollars and lower compensation and benefits expenses. This was partially offset by goodwill impairment charge associated to Latin America reporting unit.
Cash provided by operating activities came in at $1.5 billion through 6 months ended fiscal 2024 in comparison to $1.2 billion in the previous year. Capital investments came in at $294 million against $227 million in the prior year. Dividends paid saw an increase of 7% to $691 million. Organic net sales of the company should range between down 1% and flat, exhibiting a slower volume recovery in fiscal 2024.
2. Caterpillar, Inc.
The company is an American construction, mining and other engineering equipment manufacturer.
It has announced its 3Q financial results, with sales and revenues increasing 12% to $16.8 billion. Its 3Q23 profit per share came in at $5.45 and adjusted profit per share was $5.52. Higher revenues were seen mainly because of favorable price realization and increased sales volume.
Operating profit margin of the company came in at 20.5% for 3Q23 in comparison to 16.2% for 3Q22. Adjusted operating profit margin came 20.8% for the third quarter of 2023 versus 16.5% for 3Q22.
For 9 months ended September 30, 2023, enterprise operating cash flow came to the tune of $8.9 billion, and it closed 3Q with $6.5 billion of enterprise cash. During the quarter, it decided to pay dividends of $0.7 billion and it repurchased $0.4 billion of Caterpillar common stock.
The analysts at Tigress Financial increased its price target on the company’s shares from $282.00 to $295.00. They have given the stock a “Buy” rating in the report dated November 8th.
3. The J. M. Smucker Company
The company is a packaged food company, primarily operating in the US retail channel (87% of fiscal 2022 revenue. It also operates in the U.S. food-service (7%), and international (6%).
It announced its results for 2Q ended October 31, 2023, with net sales decreasing $266.5 million, or 12%. Net sales, excluding divestiture and foreign currency exchange, saw an increase of 7%. Cash provided by operations came in at $176.9 million against $205.0 million in previous year. FCF of the company came at $28.2 million versus $102.9 million in the previous year.
Continued business momentum of the company provides confidence in the company’s ability to achieve sales and earnings expectations for FY24. The company advanced its portfolio reshape activities, which includes acquisition of Hostess® sweet baked snacks and Voortman® cookie brands.
Comparable net sales of the company are anticipated to rise in the range of 8.5% – 9.0% as compared to previous year. This exhibits favorable volume/mix from the underlying business momentum and increased net pricing.
Conclusion
P/E ratio of the company exhibits the stock’s price in comparison to its earnings. This measure helps in finding cheap stocks having strong growth potential. While above are some of the best value stocks to buy for 2024, there are several other stocks from different industries which are expected to perform in coming months. In addition, with overall market recovery, the companies with solid balance sheets are poised to grow.
Read Also: